UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-31648

EURONET WORLDWIDE, INC.

(Exact name of the registrant as specified in its charter)


~~Delaware~~		~~74-2806888~~
Delaware (State or other jurisdiction of incorporation or organization)		74-2806888 (I.R.S. Employer Identification No.)


4601 COLLEGE BOULEVARD, SUITE 300
LEAWOOD, KANSAS		66211
(Address of principal executive offices)		~~66211~~ (Zip Code)

(913) 327-4200
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNoo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesoNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNoþ

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of the issuer’s common stock, $0.02 par value, outstanding as of ~~April 30,~~July 31, 2009 was ~~50,514,940~~50,650,787 shares.

PART I—FINANCIAL INFORMATION

~~ITEM 1. FINANCIAL STATEMENTS~~


ITEM 1.		FINANCIAL STATEMENTS

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited, in thousands, except share and per share data)


	As of						As of
				December 31,						December 31,
	March 31, 2009			2008			June 30, 2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	158,675		$	181,341		$	160,516		$	181,341
Restricted cash		105,498			131,025			112,577			131,025
Inventory — PINs and other		52,699			61,279			53,933			61,279
Trade accounts receivable, net of allowances for doubtful accounts of $10,135 at March 31, 2009 and $9,445 at December 31, 2008		225,287			261,084
Trade accounts receivable, net of allowances for doubtful accounts of $10,046 at June 30, 2009 and $9,445 at December 31, 2008								243,075			261,084
Deferred income taxes, net		8,429			8,539			8,196			8,539
Prepaid expenses and other current assets		39,450			35,352			39,205			35,352
Current assets of discontinued operations		3,461			3,729			3,046			3,729

Total current assets		593,499			682,349			620,548			682,349

Property and equipment, net of accumulated depreciation of $121,091 at March 31, 2009 and $125,258 at December 31, 2008		83,753			89,532
Property and equipment, net of accumulated depreciation of $139,220 at June 30, 2009 and $125,258 at December 31, 2008								94,730			89,532
Goodwill		464,805			488,305			492,448			488,305
Acquired intangible assets, net of accumulated amortization of $66,114 at March 31, 2009 and $62,920 at December 31, 2008		116,228			125,313
Acquired intangible assets, net of accumulated amortization of $75,906 at June 30, 2009 and $62,920 at December 31, 2008								120,871			125,313
Deferred income taxes, net		38,794			40,465			38,273			40,465
Other assets, net of accumulated amortization of $16,594 at March 31, 2009 and $15,785 at December 31, 2008		35,258			20,628
Other assets, net of accumulated amortization of $17,835 at June 30, 2009 and $15,785 at December 31, 2008								36,806			20,628
Non-current assets of discontinued operations		4,173			4,053			5,019			4,053

Total assets	$	1,336,510		$	1,450,645		$	1,408,695		$	1,450,645

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	200,980		$	245,671		$	218,323		$	245,671
Accrued expenses and other current liabilities		208,811			223,814			221,371			223,814
Current portion of capital lease obligations		3,685			4,614			3,866			4,614
Short-term debt obligations and current maturities of long-term debt obligations		58,944			68,646			45,063			68,646
Income taxes payable		17,399			16,590			20,791			16,590
Deferred income taxes		5,390			5,592			6,019			5,592
Deferred revenue		14,794			14,914			12,789			14,914
Current liabilities of discontinued operations		3,429			3,359			2,988			3,359


Total current liabilities		513,432			583,200			531,210			583,200

Debt obligations, net of current portion		286,710			294,355			283,823			294,355
Capital lease obligations, net of current portion		4,767			6,356			4,371			6,356
Deferred income taxes		59,813			62,905			57,608			62,905
Other long-term liabilities		8,174			7,919			8,392			7,919

Total liabilities		872,896			954,735			885,404			954,735

Equity:
Euronet Worldwide, Inc. stockholders’ equity
Preferred Stock, $0.02 par value. Authorized 10,000,000 shares; none issued		—			—			—			—
Common Stock, $0.02 par value. 90,000,000 shares authorized; 50,715,901 issued at March 31, 2009 and 50,605,909 issued at December 31, 2008		1,014			1,012
Common Stock, $0.02 par value. 90,000,000 shares authorized; 50,868,508 issued at June 30, 2009 and 50,605,909 issued at December 31, 2008								1,017			1,012
Additional paid-in-capital		732,301			729,907			735,245			729,907
Treasury stock, at cost, 227,961 shares at March 31, 2009 and 225,072 shares at December 31, 2008		(815	)		(784	)
Treasury stock, at cost, 242,649 shares at June 30, 2009 and 225,072 shares at December 31, 2008								(1,063	)		(784	)
Accumulated deficit		(245,754	)		(233,456	)		(230,210	)		(233,456	)
Restricted reserve		963			996			1,028			996
Accumulated other comprehensive income		(30,015	)		(9,350	)
Accumulated other comprehensive income (loss)								10,529			(9,350	)

Total Euronet Worldwide, Inc. stockholders’ equity		457,694			488,325			516,546			488,325
Noncontrolling interests		5,920			7,585			6,745			7,585

Total equity		463,614			495,910			523,291			495,910

Total liabilities and equity	$	1,336,510		$	1,450,645		$	1,408,695		$	1,450,645

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008
Revenues:
EFT Processing Segment	$	46,206		$	48,236		$	45,592		$	52,361		$	91,798		$	100,597
Prepaid Processing Segment		134,523			144,225			145,253			152,633			279,776			296,858
Money Transfer Segment		52,968			52,332			57,769			59,456			110,737			111,788


Total revenues		233,697			244,793			248,614			264,450			482,311			509,243

Operating expenses:
Direct operating costs		153,548			165,938			165,053			179,425			318,601			345,363
Salaries and benefits		28,596			30,694			31,085			33,064			59,681			63,758
Selling, general and administrative		19,068			20,949			20,911			20,050			39,979			40,999
Goodwill and acquired intagible assets impairment		9,884			—			—			—			9,884			—
Depreciation and amortization		12,903			13,981			13,541			14,613			26,444			28,594


Total operating expenses		223,999			231,562			230,590			247,152			454,589			478,714


Operating income		9,698			13,231			18,024			17,298			27,722			30,529


Other income (expense):
Interest income		969			3,808			885			2,092			1,854			5,900
Interest expense		(7,067	)		(9,888	)		(6,653	)		(9,138	)		(13,720	)		(19,026	)
Income from unconsolidated affiliates		518			243			516			238			1,034			481
Impairment loss on investment securities		—			(17,502	)		—			(1,258	)		—			(18,760	)
Loss on early retirement of debt		(103	)		(155	)		(150	)		(91	)		(253	)		(246	)
Foreign currency exchange gain (loss), net		(10,591	)		13,077			9,650			(378	)		(941	)		12,699


Other expense, net		(16,274	)		(10,417	)
Other income (expense), net								4,248			(8,535	)		(12,026	)		(18,952	)


Income (loss) from continuing operations before income taxes		(6,576	)		2,814
Income from continuing operations before income taxes								22,272			8,763			15,696			11,577
Income tax expense		(5,317	)		(10,087	)		(6,397	)		(1,662	)		(11,714	)		(11,749	)


Loss from continuing operations		(11,893	)		(7,273	)
Income (loss) from continuing operations								15,875			7,101			3,982			(172	)

Discontinued operations, net		(61	)		(813	)		146			(496	)		85			(1,309	)


Net loss		(11,954	)		(8,086	)
Net income (loss)								16,021			6,605			4,067			(1,481	)
Less: Net income attributable to noncontrolling interests		(344	)		(563	)		(477	)		(673	)		(821	)		(1,236	)

Net loss attributable to Euronet Worldwide, Inc.	$	(12,298	)	$	(8,649	)
Net income (loss) attributable to Euronet Worldwide, Inc.							$	15,544		$	5,932		$	3,246		$	(2,717	)


Loss per share attributable to Euronet Worldwide, Inc. stockholders — basic:
Earnings (loss) per share attributable to Euronet Worldwide, Inc. stockholders — basic:
Continuing operations	$	(0.24	)	$	(0.16	)	$	0.31		$	0.13		$	0.06		$	(0.03	)
Discontinued operations		—			(0.02	)		—			(0.01	)		—			(0.03	)

Total	$	(0.24	)	$	(0.18	)	$	0.31		$	0.12		$	0.06		$	(0.06	)

Basic weighted average shares outstanding		50,292,907			48,956,945			50,425,261			48,916,432			50,358,983			48,862,196


Loss per share attributable to Euronet Worldwide, Inc. stockholders — diluted:
Earnings (loss) per share attributable to Euronet Worldwide, Inc. stockholders — diluted:
Continuing operations	$	(0.24	)	$	(0.16	)	$	0.30		$	0.13		$	0.06		$	(0.03	)
Discontinued operations		—			(0.02	)		—			(0.01	)		—			(0.03	)

Total	$	(0.24	)	$	(0.18	)	$	0.30		$	0.12		$	0.06		$	(0.06	)

Diluted weighted average shares outstanding		50,292,907			48,956,945			51,240,221			50,575,414			50,821,373			48,862,196

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)


	Three Months Ended March 31,						Six Months Ended June 30,
	2009			2008			2009			2008
Net loss attributable to Euronet Worldwide, Inc.	$	(12,298	)	$	(8,649	)
Net income (loss)							$	4,067		$	(1,481	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		12,903			14,450			26,444			29,063
Share-based compensation		1,632			2,907			3,825			5,618
Unrealized foreign exchange (gain) loss, net		10,577			(13,073	)		1,000			(12,693	)
Non-cash impairment of goodwill and acquired intangible assets		9,884			—			9,884			—
Non-cash impairment of investment securities		—			17,502			—			18,760
Deferred income tax expense (benefit)		(1,139	)		3,438			(2,679	)		752
Income assigned to noncontrolling interests		344			563
Income from unconsolidated affiliates		(518	)		(243	)		(1,034	)		(481	)
Accretion of convetible debentures discount and amortization of debt issuance costs		3,005			3,757
Accretion of convertible debentures discount and amortization of debt issuance costs								5,855			7,630

Changes in working capital, net of amounts acquired:
Income taxes payable, net		1,463			(1,579	)		3,472			(557	)
Restricted cash		23,899			27,484			32,460			36,971
Inventory — PINs and other		6,189			1,821			8,857			(1,824	)
Trade accounts receivable		23,042			25,987			28,577			2,978
Prepaid expenses and other current assets		(6,211	)		(3,531	)		(2,684	)		10,054
Trade accounts payable		(37,569	)		(75,877	)		(37,890	)		(85,682	)
Deferred revenue		391			(624	)		(1,896	)		(490	)
Accrued expenses and other current liabilities		(10,696	)		19,368			(18,956	)		48,993
Changes in noncurrent assets and liabilities		(9,788	)		892			(9,284	)		55

Net cash provided by operating activities		15,110			14,593			50,018			57,666


Cash flows from investing activities:
Acquisitions, net of cash acquired		(3,300	)		(1,786	)		(10,016	)		(3,457	)
Acquisition escrow		—			26,000
Purchases of property and equipment		(6,648	)		(10,001	)		(16,783	)		(21,223	)
Purchases of other long-term assets		(734	)		(938	)		(1,360	)		(1,799	)
Acquisition escrow								—			26,000
Other, net		131			182			(270	)		762

Net cash provided (used) by investing activities		(10,551	)		13,457
Net cash provided by (used in) investing activities								(28,429	)		283


Cash flows from financing activities:
Proceeds from issuance of shares		373			462			888			1,007
Net repayments of short-term debt obligations and revolving credit agreements classified as current liabilities		(52	)		(215	)
Net repayments of short-term debt obligations and revolving
credit agreements classified as current liabilities								(199	)		(78	)
Borrowings from revolving credit agreements classified as non-current liabilities		90,400			23,500			285,400			29,300
Repayments of revolving credit agreements classified as non-current liabilities		(98,432	)		(74,143	)		(297,219	)		(84,943	)
Repayments of long-term debt obligations		(11,449	)		(10,000	)		(27,083	)		(15,000	)
Repayments of capital lease obligations		(1,788	)		(2,263	)		(3,149	)		(4,165	)
Cash dividends paid to noncontrolling interests stockholders		(2,413	)		—			(2,413	)		—
Other, net		614			67			(613	)		(399	)

Net cash used by financing activities		(22,747	)		(62,592	)
Net cash used in financing activities								(44,388	)		(74,278	)

Effect of exchange differences on cash		(3,638	)		4,048			2,508			4,645


Decrease in cash and cash equivalents		(21,826	)		(30,494	)		(20,291	)		(11,684	)
Cash and cash equivalents at beginning of period (includes cash of discontinued operations of $552 in 2009 and $722 in 2008)		181,893			267,591			181,893			267,591


Cash and cash equivalents at end of period (includes cash of discontinued operations of $1,392 in 2009 and $0 in 2008)	$	160,067		$	237,097
Cash and cash equivalents at end of period (includes cash of discontinued operations of $1,086 in 2009 and $300 in 2008)							$	161,602		$	255,907


Interest paid during the period	$	1,505		$	4,149		$	7,162		$	11,665
Income taxes paid during the period		5,210			6,881			11,805			10,464

EURONET WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Organization

Euronet Worldwide, Inc. and its subsidiaries (the “Company” or “Euronet”) is an industry leader in processing secure electronic financial transactions in three principal business segments. Euronet’s Prepaid Processing Segment is one of the world’s largest providers of “top-up” services for prepaid products, primarily prepaid mobile airtime, distributing these products in Europe, the Middle East, Asia Pacific and North America. The EFT Processing Segment provides end-to-end solutions relating to operations of automated teller machine (“ATM”) and point-of-sale (“POS”) networks, and debit and credit card processing in Europe, the Middle East and Asia Pacific. The Money Transfer Segment, comprised primarily of the Company’s RIA Envia, Inc. (“RIA”) subsidiary and its operating subsidiaries, is the third-largest global money transfer company based upon revenues and volumes, and provides services through a sending network of agents and Company-owned stores primarily in North America and Europe, disbursing money transfers through a worldwide payer network.

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company, in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, such unaudited consolidated financial statements contain all adjustments (consisting of normal interim closing procedures) necessary to present fairly the financial position of the Company as of ~~March 31,~~June 30, 2009, and the results of its operations for the three- and six-month periods ended June 30, 2009 and 2008 and its cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2009 and 2008.

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Euronet for the year ended December 31, 2008, including the notes thereto, set forth in the Company’s 2008 Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The results of operations for the ~~three-month period~~three- and six-month periods ended ~~March 31,~~June 30, 2009 are not necessarily indicative of the results to be expected for the full year ending December 31, 2009. Certain amounts in ~~the~~ prior ~~year~~years have been reclassified to conform to current period presentation.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

Convertible debentures

Effective January 1, 2009, the Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).” FSP APB 14-1 requires the proceeds from the issuance of such convertible debt instruments to be allocated between debt and equity components so that debt is discounted to reflect the Company’s nonconvertible debt borrowing rate. The debt discount is amortized over the period the convertible debt is expected to be outstanding as additional non-cash interest expense. This treatment impacts the accounting associated with the Company’s convertible debentures. The Company’s Unaudited Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income ~~(Loss)~~ and Statements of Cash Flows have been adjusted to reflect the retrospective application of the provisions to prior periods.

Noncontrolling interests

Effective January 1, 2009, the Company adopted the provision of FASB Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements.” SFAS No. 160 requires noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. The presentation of the Company’s Unaudited Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income ~~(Loss)~~ and Statements of Cash Flows has been adjusted to reflect the retrospective application of the provisions to prior periods.

Business combinations

Effective January 1, 2009, the Company adopted the provision of SFAS No. 141(R), “Business Combinations,” which is a revision of SFAS No. 141, “Business Combinations.” SFAS No. 141(R) applies to all business combinations and requires most identifiable assets,

liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” at the acquisition date. SFAS No. 141(R) also requires transaction-related costs to be expensed in the period incurred, rather than capitalizing these costs as a component of the respective purchase price.

Accounting for derivative instruments and hedging activities

The Company accounts for derivative instruments and hedging activities in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, which requires that all derivative instruments be recognized as either assets or liabilities on the balance sheet at fair value. During the second quarter 2007, the Company entered into derivative instruments to manage exposure to interest rate risk that are considered cash flow hedges under the provisions of SFAS No. 133. To qualify for hedge accounting under SFAS No. 133, the details for the hedging relationship must be formally documented at the inception of the arrangement, including the Company’s hedging strategy, risk management objective, the specific risk being hedged, the derivative instrument being used, the item being hedged, an assessment of hedge effectiveness and how effectiveness will continue to be assessed and measured. For the effective portion of a cash flow hedge, changes in the value of the hedge instrument are recorded temporarily in stockholders’ equity and the Unaudited Consolidated Statements of Comprehensive Income ~~(Loss)~~ as a component of other comprehensive income and then recognized as an adjustment to interest expense over the term of the hedging instrument.

In the Money Transfer Segment, the Company enters into foreign currency forward contracts to offset foreign currency exposure related to the notional value of money transfer transactions collected in currencies other than the U.S. dollar. These forward contracts are considered derivative instruments under the provisions of SFAS No. 133, however, the Company does not designate such instruments as hedges. Accordingly, changes in the value of these contracts are recognized immediately as a component of foreign currency exchange gain (loss), net in the Unaudited Consolidated Statements of Operations. The impact of changes in value of these forward contracts, together with the impact of the change in value of the related foreign currency denominated receivable, on the Company’s Unaudited Consolidated Statements of Operations is not significant.

Cash flows resulting from derivative instruments are classified as cash flows from operating activities in the Company’s Unaudited Consolidated Statements of Cash Flows. The Company enters into derivative instruments with financial institutions it believes to be highly credit-worthy and does not use derivative instruments for trading or speculative purposes.

Additionally, effective January 1, 2009, the Company adopted the provisions of SFAS No. 161, “Disclosures about Derivative Instruments and Hedging ~~Activities”~~Activities,” which requires an entity to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. See Note 7, Derivative Instruments and Hedging Activities, for these disclosures and a further discussion of derivative instruments.

Fair value measurements

Effective January 1, 2008, the Company adopted the provisions of SFAS No. 157, “Fair Value ~~Measurements”~~Measurements,” for financial assets and liabilities. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Statement applies whenever other accounting pronouncements require or permit fair value measurements. Accordingly, this Statement does not require any new fair value measurements. Additionally, FSP ~~FAS~~No. 157-2, “Effective Date of FASB Statement No. 157,” delayed the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for certain nonfinancial assets and liabilities. Beginning January 1, 2009, the Company adopted the provisions for those nonfinancial assets and liabilities, which include those measured at fair value in goodwill impairment testing, indefinite-lived intangible assets measured at fair value for impairment assessment, nonfinancial long-lived assets measured at fair value for impairment assessment and investments in unconsolidated subsidiaries.

Effective for the quarterly reporting period ended June 30, 2009, the Company adopted the provisions of FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires the annual fair value disclosures about financial instruments within the scope of SFAS No. 107 to also be made in interim financial statements.

See Note 9, Fair Value Measurements, for the required fair value disclosures.

Money transfer settlement obligations

Money transfer settlement obligations are recorded in accrued expenses and other current liabilities on the Company’s Unaudited Consolidated Balance Sheets and consist of amounts owed by Euronet to money transfer recipients. As of ~~March 31,~~June 30, 2009, the Company’s money transfer settlement obligations were ~~$31.3~~$31.9 million.

Sheets as of ~~March 31,~~June 30, 2009 and December 31, 2008. During the first quarter 2008, the Company also recorded ~~acquisition related~~acquisition-related expenses totaling $3.0 million, which are included in selling, general and administrative expenses.

Subsequent events

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events.” This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards, but the rules concerning recognition and disclosure of subsequent events will remain essentially unchanged. SFAS No. 165 provides general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted the provisions of SFAS No. 165 for the quarter ended June 30, 2009. The adoption of these provisions did not have a material effect on the Consolidated Financial Statements. The Company has evaluated subsequent events through August 10, 2009, the date the financial statements were issued. Events occurring after this date have not been evaluated.

Recent accounting pronouncements

In ~~April~~June 2009, the FASB issued FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP FAS 141(R)-1 amends the requirements to measure contingencies acquired in a business combination at fair value, requiring that a contingency acquired in a business combination be initially measured at fair value on the acquisition date if fair value can be determined during the measurement period. Acquired contingencies whose fair value cannot be determined during the measurement period would be recognized if it is probable that an asset existed or liability had been incurred at the acquisition dateSFAS No. 168, “The FASB Accounting Standards Codification™ and the ~~amount~~Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 168 authorizes theFASB Accounting Standards Codification™ (“Codification”) to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws remain sources of authoritative GAAP for SEC registrants. On the effective date of SFAS No. 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. All guidance contained in the Codification carries an equal level of authority. Certain accounting treatments that ~~asset~~entities have followed, and continue to follow, which are not part of the Codification are grandfathered because they were adopted before a certain date or ~~liability can be reasonably estimated. FSP FAS 141(R)-1~~certain accounting standards have allowed for the continued application of superseded accounting standards. SFAS No. 168 is effective for ~~Euronet beginning January 1, 2009, concurrent with the adoption of SFAS No. 141(R),~~financial statements issued for interim and ~~it did not have a material impact on the Consolidated Financial Statements.~~

~~In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires the~~ annual fair value disclosures about financial instruments within the scope of FAS 107 to also be made in interim financial statements. FSP FAS 107-1 and APB 28-1 is effective for Euronet for the quarterly reporting periodperiods ending ~~June 30,~~after September 15, 2009. The Company’s adoption of ~~FSP FAS 107-1 and APB 28-1~~SFAS No. 168 is not expected to have a material impact on the Consolidated Financial Statements. However, all references to U.S. GAAP recognized by the FASB will use Codification citations except for those to grandfathered accounting literature.

(3) EARNINGS PER SHARE

Basic earnings per share has been computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the respective period. Diluted earnings per share has been computed by dividing earnings available to common stockholders by the ~~weighted-average~~weighted average shares outstanding during the respective period, after adjusting for ~~the~~any potential dilution of the assumed conversion of the Company’s convertible debentures, shares issuable in connection with acquisition obligations, restricted stock and options to purchase the Company’s common stock. The following table provides the computation of diluted weighted average number of common shares outstanding:


	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Computation of diluted weighted average shares outstanding:
Basic weighted average shares outstanding		50,425,261		48,916,432		50,358,983		48,862,196
Incremental shares from assumed conversion of stock options and restricted stock		814,960		572,266		462,390		—
Weighted average shares issuable in connection with acquisition obligations		—		1,086,716		—		—


Diluted weighted average shares outstanding		51,240,221		50,575,414		50,821,373		48,862,196

The table includes all stock options and restricted stock that are dilutive to Euronet’s weighted average common shares outstanding during the period. For the ~~three-month periods~~six months ended ~~March 31, 2009 and~~June 30, 2008, the Company incurred a net ~~losses;~~loss; therefore, diluted loss per share is the same as basic loss per share for ~~each~~the period. ~~For the three-month periods ended March 31, 2009 and 2008, the~~The calculation of diluted ~~loss~~earnings per share excludes ~~approximately 4,928,000 and 3,192,000, respectively,~~ stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares ~~outstanding.~~outstanding for the three- and six-month periods ended June 30, 2009 of approximately 1,989,000 and 3,868,000, respectively. The calculation of diluted earnings per share excludes stock options or shares of restricted stock that are anti-dilutive to the Company’s weighted average common shares outstanding for the three- and six-month periods ended June 30, 2008 of approximately 1,632,000 and 2,959,000, respectively. Additionally, for the ~~three~~six months ended ~~March 31,~~June 30, 2008, the calculation of diluted loss per share excludes approximately ~~953,000~~1,087,000 shares issuable in connection with acquisition obligations that are anti-dilutive to the Company’s weighted average common shares outstanding.

The Company has ~~$59.2~~$44.2 million principal amount of 1.625% convertible debentures due 2024 and $175 million principal amount of 3.50% convertible debentures due 2025 outstanding that, if converted, would have a potentially dilutive effect on the Company’s stock. These debentures are convertible into ~~1.8~~1.3 million shares of Common Stock for the ~~$59.2~~$44.2 million 1.625% issue, and 4.3 million shares of Common Stock for the $175 million 3.50% issue, only upon the occurrence of certain conditions. As required by EITF Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share,” if dilutive, the impact of the contingently issuable shares must be included in the calculation of diluted earnings per share under the “if-converted” method, regardless of whether the conditions upon which the debentures would be convertible into shares of the Company’s Common Stock have been met. Under the if-converted method, the assumed ~~conversion~~conversions of the 1.625% and 3.50% convertible debentures ~~was~~were anti-dilutive for ~~both three-month~~the three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008.

(4) DISCONTINUED OPERATIONS

During the second quarter 2008, the Company committed to a plan to sell Euronet Essentis Limited (“Essentis”), a U.K. software entity, in order to focus its investments and resources on its transaction processing businesses. The Company is incurrently negotiating an agreement to sell the ~~process~~assets of ~~selling~~ the business. Accordingly, Essentis’s results of operations are shown as discontinued operations in the Unaudited Consolidated Statements of Operations for all periods presented. Previously, Essentis’s results were reported in the EFT Processing Segment. The segment results in Note 8, Segment Information, also reflect the reclassification of ~~Essentis’s results~~Essentis to discontinued operations. The following amounts related to Essentis have been segregated from continuing operations and reported as discontinued operations:


	Three Months Ended March 31,						Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2009			2008			2009		2008			2009		2008
Revenues	$	1,424		$	2,270		$	1,835	$	2,864		$	3,259	$	5,134
Loss before income taxes	$	(93	)	$	(1,121	)
Net loss	$	(61	)	$	(813	)
Income (loss) before income taxes							$	212	$	(665	)	$	119	$	(1,786	)
Net income (loss)							$	146	$	(496	)	$	85	$	(1,309	)

(6) DEBT OBLIGATIONS

A summary of debt obligation activity for the ~~three-month~~six-month period ended ~~March 31,~~June 30, 2009 is presented below:


										1.625%			3.50%																	1.625%			3.50%
	Revolving									Convertible			Convertible								Revolving									Convertible			Convertible
	Credit			Other Debt			Capital			Debentures			Debentures								Credit			Other Debt			Capital			Debentures			Debentures
(in thousands)	Facilities			Obligations			Leases			Due 2024			Due 2025		Term Loan			Total			Facilities			Obligations			Leases			Due 2024			Due 2025		Term Loan			Total
Balance at December 31, 2008	$	16,719		$	288		$	10,970		$	66,548		$	147,446	$	132,000		$	373,971		$	16,719		$	288		$	10,970		$	66,548		$	147,446	$	132,000		$	373,971
Increases (decreases):
Net borrowings (repayments)		(8,032	)		(52	)		(1,746	)		(10,411	)		—		(1,000	)		(21,241	)
Net repayments																						(11,819	)		(199	)		(3,000	)		(24,966	)		—		(2,000	)		(41,984	)
Accretion		—			—			—			906			1,567		—			2,473			—			—			—			1,581			3,169		—			4,750
Capital lease interest		—			—			446								—			446			—			—			808			—			—		—			808
Foreign exchange gain		(175	)		(150	)		(1,218	)		—			—		—			(1,543	)
Foreign currency exchange (gain) loss																						118			1			(541	)		—			—		—			(422	)


Balance at March 31, 2009		8,512			86			8,452			57,043			149,013		131,000			354,106
Balance at June 30, 2009																						5,018			90			8,237			43,163			150,615		130,000			337,123

Less — current maturities		—			(1	)		(3,685	)		(57,043	)		—		(1,900	)		(62,629	)		—			—			(3,866	)		(43,163	)		—		(1,900	)		(48,929	)


Long-term obligations at March 31, 2009	$	8,512		$	85		$	4,767		$	—		$	149,013	$	129,100		$	291,477
Long-term obligations at June 30, 2009																					$	5,018		$	90		$	4,371		$	—		$	150,615	$	128,100		$	288,194

(8) SEGMENT INFORMATION

Euronet’s reportable operating segments have been determined in accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information.” The Company currently operates in the following three reportable operating segments:

	1)		Through the EFT Processing Segment, the Company processes transactions for a network of ATMs and POS terminals across Europe, the Middle East and Asia Pacific. The Company provides comprehensive electronic payment solutions consisting of ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing and electronic recharge services for prepaid mobile airtime. Through this segment, the Company also offers a suite of integrated electronic financial transaction (“EFT”) software solutions for electronic payment, merchant acquiring, card issuing and transaction delivery systems.


	2)		Through the Prepaid Processing Segment, the Company provides distribution of prepaid mobile airtime and other prepaid products and collection services in Europe, the Middle East, Asia Pacific and North America.

	3)		Through the Money Transfer Segment, the Company provides global money transfer and bill payment services through a sending network of agents and Company-owned stores primarily in North America and Europe, disbursing money transfers through a worldwide payer network. Bill payment services are offered primarily in the U.S.

In addition, in its administrative division, “Corporate Services, Eliminations and Other,” the Company accounts for non-operating activity, certain intersegment eliminations and the costs of providing corporate and other administrative services to the three segments. These services are not directly identifiable with the Company’s reportable operating segments. The following tables present the segment results of the Company’s operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008:


	For the Three Months Ended March 31, 2009												For the Three Months Ended June 30, 2009
								Corporate											Corporate
								Services,											Services,
	EFT		Prepaid		Money			Eliminations					EFT		Prepaid		Money		Eliminations
(in thousands)	Processing		Processing		Transfer			and Other			Consolidated		Processing		Processing		Transfer		and Other			Consolidated
Total revenues	$	46,206	$	134,523	$	52,968		$	—		$	233,697	$	45,592	$	145,253	$	57,769	$	—		$	248,614


Operating expenses:
Direct operating costs		18,955		109,035		25,558			—			153,548		19,656		117,342		28,055		—			165,053
Salaries and benefits		7,012		6,424		11,820			3,340			28,596		7,443		6,793		13,103		3,746			31,085
Selling, general and administrative		4,147		4,542		8,815			1,564			19,068		4,157		5,409		8,847		2,498			20,911
Goodwill and acquired intangible asset impairment		—		—		9,884			—			9,884
Depreciation and amortization		4,182		3,646		4,762			313			12,903		4,537		3,598		5,083		323			13,541

Total operating expenses		34,296		123,647		60,839			5,217			223,999		35,793		133,142		55,088		6,567			230,590

Operating income (loss)	$	11,910	$	10,876	$	(7,871	)	$	(5,217	)	$	9,698	$	9,799	$	12,111	$	2,681	$	(6,567	)	$	18,024

(9) FAIR VALUE MEASUREMENTS

The carrying amount of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term debt obligations approximates fair value, due to their short maturities. The carrying value of the Company’s term loan due 2014 and revolving credit agreements approximate fair value because interest is based on LIBOR that resets at various intervals of less than one year. The following table provides the estimated fair values of the Company’s other financial instruments, based on quoted market prices or significant other observable inputs.


	As of
	June 30, 2009						December 31, 2008
	Carrying						Carrying
(in thousands)	Value			Fair Value			Value			Fair Value
Available-for-sale investment securities	$	2,381		$	2,381		$	1,351		$	1,351
1.625% convertible senior debentures, unsecured, due 2024		43,163			43,068			66,548			63,522
3.50% convertible debentures, unsecured, due 2025		150,615			153,125			147,446			112,131
Foreign currency derivative contracts		(9	)		(9	)		278			278
Embedded derivative in foreign lease		(293	)		(293	)		—			—
Interest rate swaps related to floating rate debt		—			—			(830	)		(830	)

The Company’s assets and liabilities recorded at fair value on a recurring basis are set forth in the following table:


				Fair Value Measurements as of								Fair Value Measurements as of
				March 31, 2009 Using								June 30, 2009 Using
				Quoted Prices		Signifcant						Quoted Prices		Signifcant
	Carrying			in Active		Other			Carrying			in Active		Other
	Value as of			Markets for		Observable			Value as of			Markets for		Observable
(in thousands)	March 31, 2009			Identical Assets		Inputs			June 30, 2009			Identical Assets		Inputs
Available-for-sale investment securities	$	1,579		$	1,579	$	—		$	2,381		$	2,381	$	—
Interest rate swaps related to floating rate debt		(353	)		—		(353	)
Foreign currency derivative contracts		241			—		241			(9	)		—		(9	)
Embedded derivative in foreign lease		(569	)		—		(569	)		(293	)		—		(293	)

	•		In connection with contracts with financial institutions in the EFT Processing Segment, the Company is responsible for damages to ATMs and theft of ATM network cash that, generally, is not recorded on the Company’s Consolidated Balance Sheet. As of June 30, 2009, the balance of ATM network cash for which the Company was responsible was approximately $290 million. The Company maintains insurance policies to mitigate this exposure;

	•		In connection with the license of proprietary systems to customers, Euronet provides certain warranties and infringement indemnities to the licensee, which generally warrant that such systems do not infringe on intellectual property owned by third parties and that the systems will perform in accordance with their specifications;


	•		Euronet has entered into purchase and service agreements with vendors and consulting agreements with providers of consulting services, pursuant to which the Company has agreed to indemnify certain of such vendors and consultants, respectively, against third-party claims arising from the Company’s use of the vendor’s product or the services of the vendor or consultant;

	•		In connection with acquisitions and dispositions of subsidiaries, operating units and business assets, the Company has entered into agreements containing indemnification provisions, which can be generally described as follows: (i) in connection with acquisitions made by Euronet, the Company has agreed to indemnify the seller against third party claims made against the seller relating to the subject subsidiary, operating unit or asset and arising after the closing of the transaction, and (ii) in connection with dispositions made by Euronet, Euronet has agreed to indemnify the buyer against damages incurred by the buyer due to the buyer’s reliance on representations and warranties relating to the subject subsidiary, operating unit or business assets in the disposition agreement if such representations or warranties were untrue when made;


	•		Euronet has entered into agreements with certain third parties, including banks that provide fiduciary and other services to Euronet or to the Company’s benefit plans. Under such agreements, the Company has agreed to indemnify such service providers for third party claims relating to the carrying out of their respective duties under such agreements; and

	•		The Company has obtained surety bonds in compliance with money transfer licensing requirements of the applicable governmental authorities and has agreed to reimburse the surety for any amounts that they are required to pay in connection with such bonds.

The Company is also required to meet minimum capitalization and cash requirements of various regulatory authorities in the jurisdictions in which the Company has money transfer operations. To date, the Company is not aware of any significant claims made by the indemnified parties or third parties to guarantee agreements with the Company and, accordingly, no liabilities were recorded as of ~~March 31,~~June 30, 2009 or December 31, 2008.

(11) INCOME TAXES

The Company’s effective tax rates for continuing operations were ~~(81%)~~28.7% and ~~359%~~19.0% for the three-month periods ended ~~March 31,~~June 30, 2009 and 2008, respectively, and were 74.6% and 101.5% for the six-month periods ended June 30, 2009 and 2008, respectively. The effective tax rates were significantly influenced by the goodwill and acquired intangible assets impairment charge ~~and foreign currency exchange net loss for~~in the first quarter 2009 and the impairment ~~loss~~losses on investment securities ~~and~~during the first half of 2008. Additionally, foreign currency exchange ~~net gain for~~rates fluctuated significantly during the ~~first quarter 2008.~~reported periods creating foreign currency exchange gains and losses that impacted the effective tax rates. Excluding foreign currency exchange results and the impairments to goodwill and acquired intangible assets and to investment securities from pre-tax income, as well as the related tax effects for these items, the Company’s effective tax rates were ~~41.6%~~46.8% and ~~28.1%~~20.2% for the three months ended ~~March 31,~~June 30, 2009 and 2008, respectively, and 44.1% and 23.4% for the six months ended June 30, 2009 and 2008, respectively.

The ~~increase~~increases in the effective tax ~~rate,~~rates, as adjusted, for the second quarter and first ~~quarter~~half of 2009 compared to the same periods in 2008 are primarily related to the Company’s U.S. tax position. For the three- and six-month periods ended June 30, 2009, the Company has recorded a valuation allowance against its U.S. federal tax net operating losses as it has determined that it is more likely than not that a tax benefit will not be realized. Accordingly, the federal income tax benefit associated with pre-tax book losses generated by the Company’s U.S. entities has not been recognized in these periods. For the three- and six-month periods ended June 30, 2008, no valuation allowance was recorded against its U.S. federal tax net operating losses, resulting in a tax benefit associated with the pre-tax loss generated by the Company’s U.S. operations. Additional reasons for the increases in the Company’s effective tax rates include the accrual of incremental state income tax expense in the first six months of 2009 compared to the same period in 2008, ~~was primarily related~~mainly due to exhausting certain state net operating losses, and the recognition of a one-time tax benefit in the first half of 2008 resulting from the successful conclusion of a tax audit in one of the Company’s foreign jurisdictions. Finally, the loss of certain income tax deductions in Spain as a result of the goodwill and acquired intangible assets impairment ~~charges. Also, approximately $3.5 million~~charges increased income tax expense in the first half of ~~contract termination fees were recorded~~2009.

(12) CONTINGENCIES

In the second quarter 2009, the Antitrust Division of the United States Department of Justice (the “DOJ”) served Continental Exchange Solutions, Inc. d/b/a RIA Financial Services (“CES”), an indirect, wholly-owned subsidiary of the Company, with a grand jury subpoena requesting documents from CES and its affiliates in ~~India which has a tax rate~~connection with an investigation into money transmission services to the Dominican Republic during the period from January 1, 2004 to the date of the subpoena. The Company and CES are fully cooperating with the DOJ in its investigation.

At this time, the Company is unable to predict whether this investigation will result in the DOJ bringing charges against CES. Accordingly, the Company is unable to predict the outcome of this investigation, the possible loss or possible range of loss, if any, associated with the resolution of any charges that ~~is higher than~~may be brought against CES, or any potential effect on the Company’s ~~weighted average effective tax rate.~~business, results of operations or financial condition.

The Company acquired all of the stock of RIA Envia, Inc., the parent of CES, in April 2007.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW

COMPANY OVERVIEW, GEOGRAPHIC LOCATIONS AND PRINCIPAL PRODUCTS AND SERVICES

Euronet Worldwide, Inc. (together with our subsidiaries, “we,” “us,” “Euronet” or the “Company”) is a leading electronic payments provider, offering automated teller machine (“ATM”), and point-of-sale (“POS”) and card outsourcing services, card issuing and merchant acquiring services, integrated electronic financial transaction (“EFT”) software, network gateways, electronic distribution of top-up services for prepaid mobile airtime and other prepaid products, electronic consumer money transfer and bill payment services to financial institutions, mobile operators, retailers and individual customers. As of ~~March 31,~~June 30, 2009, we operate in the following three principal business ~~segments.~~segments:

	•		An EFT Processing Segment, which processes transactions for a network of ~~9,205~~9,336 ATMs and approximately ~~56,000~~51,000 POS terminals across Europe, the Middle East and Asia Pacific. We provide comprehensive electronic payment solutions consisting of ATM network participation, outsourced ATM and POS management solutions, credit and debit card outsourcing and electronic recharge services for prepaid mobile airtime. Through this segment, we also offer a suite of integrated EFT software solutions for electronic payment and transaction delivery systems.

	•		A Prepaid Processing Segment, which provides distribution of prepaid mobile airtime and other prepaid products and collection services for various prepaid products, cards and services. We are one of the largest international providers of prepaid mobile airtime processing. Including terminals operated by unconsolidated subsidiaries, we operate a network of approximately ~~421,000~~470,000 POS terminals providing electronic processing of prepaid mobile airtime top-up services in Europe, the Middle East, Asia Pacific and North America.

	•		A Money Transfer Segment, which provides global consumer to consumer money transfer services. We offer this service through a sending network of agents and Company-owned stores primarily in Europe and North America, disbursing money transfers through a worldwide payer network. Bill payment services are offered primarily in the U.S. Based on revenues and volumes, ~~through this segment,~~ we are the third-largest global money transfer company. The Money Transfer Segment originates and terminates transactions through a network of approximately ~~77,100~~79,200 locations, which include sending agents and Company-owned stores, and an extensive payer network in more than 100 countries.

We have five processing centers in Europe, two in Asia Pacific and two in North America. We have 23 principal offices in Europe, ~~six~~seven in North America, five in Asia Pacific and one in the Middle East. Our executive offices are located in Leawood, Kansas, USA. With approximately ~~73%~~74% of our revenues denominated in currencies other than the U.S. dollar, any significant changes in currency exchange rates will likely have a significant impact on our growth in revenues, operating income and diluted earnings per share.

SOURCES OF REVENUES AND CASH FLOW

Euronet earns revenues and income based on ATM management fees, transaction fees and commissions, professional services, software licensing fees and software maintenance agreements. Each business segment’s sources of revenue are described below.

EFT Processing Segment— Revenues in the EFT Processing Segment, which represented approximately ~~20%~~19% of total consolidated revenues for the first ~~quarter~~half of 2009, are derived from fees charged for transactions effected by cardholders on our proprietary network of ATMs, as well as fixed management fees and transaction fees we charge to banks for operating ATMs and processing credit cards under outsourcing agreements. Through our proprietary network, we generally charge fees for four types of ATM transactions: i) cash withdrawals, ii) balance inquiries, iii) transactions not completed because the relevant card issuer ~~does~~did not give authorization, and iv) prepaid telecommunication recharges. Revenues in this segment are also derived from license fees, professional services and maintenance fees for software and sales of related hardware. Software license fees are the fees we charge to license our proprietary application software to customers. Professional service fees consist of charges for customization, installation and consulting services to customers. Software maintenance revenues represent the ongoing fees charged for maintenance and support for customers’ software products. Hardware sales are derived from the sale of computer equipment necessary for the respective software solution.

Prepaid Processing Segment— Revenues in the Prepaid Processing Segment, which represented approximately ~~57%~~58% of total consolidated revenues for the first ~~quarter~~half of 2009, are primarily derived from commissions or processing fees received from telecommunications service providers for the sale and distribution of prepaid mobile airtime. We also generate revenues from commissions earned from the distribution of other prepaid products. Due to certain provisions in our mobile phone operator agreements, the operators have the ability to reduce the overall commission paid on each top-up transaction. However, by virtue of our agreements with retailers (distributors where POS terminals are located) in certain markets, not all of these reductions are absorbed by us because we are able to pass a significant portion of the reductions to retailers. Accordingly, under certain retailer agreements, the effect is to reduce revenues and reduce our direct operating costs resulting in only a small impact on gross ~~margin~~profit and operating income. In some markets, reductions in commissions can significantly impact our results as it may not be possible, either contractually or commercially in the concerned market, to pass a

1619

reduction in commissions to the retailers. In Australia, certain retailers negotiate directly with the mobile phone operators for their own commission rates, which also limits our ability to pass through reductions in commissions. Agreements with mobile operators are important to the success of our business. These agreements permit us to distribute prepaid mobile airtime to the mobile operators’ customers. Other products offered by this segment include prepaid long distance calling card plans, prepaid ~~Internet~~internet plans, prepaid debit cards, prepaid gift cards, bill payment, money transfer and prepaid mobile content such as music, ringtones and games.

Money Transfer Segment— Revenues in the Money Transfer Segment, which ~~represents~~represented approximately 23% of total consolidated revenues for the first ~~quarter~~half of 2009, are primarily derived ~~through the~~from charging of a transaction fee, as well as the difference between purchasing foreign currency at wholesale exchange rates and selling the foreign currency to consumers at retail exchange rates. We have an origination network in place comprised of agents and ~~company-owned~~Company-owned stores primarily in Europe and North America and a worldwide network of correspondent agents, consisting primarily of financial institutions in the transfer destination countries. Origination and correspondent agents each earn fees for cash collection and distribution services. These fees are recognized as direct operating costs at the time of sale.

OPPORTUNITIES AND CHALLENGES

EFT Processing Segment— The continued expansion and development of our EFT Processing Segment business will depend on various factors including, but not necessarily limited to, the following:

	•		the impact of competition by banks and other ATM operators and service providers in our current target markets;

	•		the demand for our ATM outsourcing services in our current target markets;

	•		the ability to develop products or services to drive increases in transactions;

	•		the expansion of our various business lines in markets where we operate and in new markets;

	•		the entrance into additional card acceptance and ATM management agreements with banks;

	•		the ability to obtain required licenses in markets we intend to enter or expand services;

	•		the availability of financing for expansion;

	•		the ability to efficiently install ATMs contracted under newly awarded outsourcing agreements;

	•		the ability to renew existing contracts at profitable rates;

	•		the ability to expand and sign additional customers for the cross-border merchant processing and acquiring business; and

	•		the continued development and implementation of our software products and their ability to interact with other leading products.

Prepaid Processing Segment— The continued expansion and development of the Prepaid Processing Segment business will depend on various factors, including, but not necessarily limited to, the following:

	•		the ability to negotiate new agreements in additional markets with mobile phone operators, agent financial institutions and retailers;

	•		the ability to use existing expertise and relationships with mobile operators and retailers to our advantage;

	•		the continuation of the trend towards conversion from scratch card solutions to electronic processing solutions for prepaid mobile airtime among mobile phone users and the continued use of third-party providers such as ourselves to supply this service;

	•		the development of mobile phone networks in these markets and the increase in the number of mobile phone users;

	•		the overall pace of growth in the prepaid mobile phone market;

	•		our market share of the retail distribution capacity;

	•		the level of commission that is paid to the various intermediaries in the prepaid mobile airtime distribution chain;

	•		our ability to add new and differentiated prepaid products in addition to those offered by mobile operators;

	•		the ability to take advantage of cross-selling opportunities with our Money Transfer Segment, including providing money transfer services through our prepaid locations; and

	•		the availability of financing for further expansion.

Money Transfer Segment —The expansion and development of our money transfer business will depend on various factors, including, but not necessarily limited to, the following:

	•		the continued growth in worker migration and employment opportunities;

	•		the mitigation of economic and political factors that have had an adverse impact on money transfer volumes, such as changes in the economic sectors in which immigrants work and the developments in immigration policies in the U.S.;

	•		the continuation of the trend of increased use of electronic money transfer and bill payment services among immigrant workers and the unbanked population in our markets;

	•		the ability to maintain our agent and correspondent networks;

	•		the ability to offer our products and services or develop new products and services at competitive prices to drive increases in transactions;

	•		the expansion of our services in markets where we operate and in new markets;


	•		our ability to fund working capital requirements;

	•		our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

	•		the ability to take advantage of cross-selling opportunities with our Prepaid Processing Segment, including providing prepaid services through RIA’s stores and agents worldwide;

	•		the ability to leverage our banking and merchant/retailer relationships to expand money transfer corridors to Europe, Asia and ~~Asia,~~Africa, including high growth corridors to Central and Eastern European countries;

	•		the availability of financing for further expansion; and

	•		our ability to continue to successfully integrate RIA with our ~~other~~existing operations.

Corporate Services, Eliminations and Other—In addition to operating in our principal business segments described above, our “Corporate Services, Elimination and Other” ~~division~~category includes non-operating activity, certain inter-segment eliminations and the cost of providing corporate and other administrative services to the business segments, including share-based compensation expense related to ~~most~~ stock option and restricted stock grants. These services are not directly identifiable with our business segments.

SEGMENT SUMMARY RESULTS OF OPERATIONS

Revenues and operating income by segment for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008 are summarized in the tables below:


																				Revenues for the Three										Revenues for the Six
																				Months Ended June 30,						Year-over-Year Change				Months Ended June 30,						Year-over-Year Change
																										Decrease			Decrease							Decrease			Decrease
(dollar amounts in thousands)																				2009			2008			Amount			Percent	2009			2008			Amount			Percent
EFT Processing																				$	45,592		$	52,361		$	(6,769	)	(13%)	$	91,798		$	100,597		$	(8,799	)	(9%)
Prepaid Processing																					145,253			152,633			(7,380	)	(5%)		279,776			296,858			(17,082	)	(6%)
Money Transfer																					57,769			59,456			(1,687	)	(3%)		110,737			111,788			(1,051	)	(1%)

Total																				$	248,614		$	264,450		$	(15,836	)	(6%)	$	482,311		$	509,243		$	(26,932	)	(5%)


																				Operating Income (Loss)										Operating Income (Loss)
	Revenues for the Three								Operating Income (Loss) for the											for the Three Months										for the Six Months Ended
	Months Ended March 31,				Year-over-Year Change				Three Months Ended March 31,						Year-over-Year Change					Ended June 30,						Year-over-Year Change				June 30,						Year-over-Year Change
					Increase			Increase							Increase			Increase								Increase										Increase			Increase
					(Decrease)			(Decrease)							(Decrease)			(Decrease)								(Decrease)			Increase							(Decrease)			(Decrease)
(dollar amounts in thousands)	2009		2008		Amount			Percent	2009			2008			Amount			Percent		2009			2008			Amount			Percent	2009			2008			Amount			Percent
EFT Processing	$	46,206	$	48,236	$	(2,030	)	(4%)	$	11,910		$	10,145		$	1,765			17%	$	9,799		$	9,039		$	760		8%	$	21,709		$	19,184		$	2,525		13%
Prepaid Processing		134,523		144,225		(9,702	)	(7%)		10,876			10,334			542			5%		12,111			11,420			691		6%		22,987			21,754			1,233		6%
Money Transfer		52,968		52,332		636		1%		(7,871	)		1,951			(9,822	)		n/m		2,681			2,558			123		5%		(5,190	)		4,509			(9,699	)	n/m

Total		233,697		244,793		(11,096	)	(5%)		14,915			22,430			(7,515	)		(34%)		24,591			23,017			1,574		7%		39,506			45,447			(5,941	)	(13%)
Corporate services		—		—		—				(5,217	)		(9,199	)		3,982			(43%)		(6,567	)		(5,719	)		(848	)	15%		(11,784	)		(14,918	)		3,134		(21%)

Total	$	233,697	$	244,793	$	(11,096	)	(5%)	$	9,698		$	13,231		$	(3,533	)		(27%)	$	18,024		$	17,298		$	726		4%	$	27,722		$	30,529		$	(2,807	)	(9%)


	Average Translation Rate
	Six Months Ended		Six Months Ended		Decrease
Currency	June 30, 2009		June 30, 2008		Percent
Australian dollar	$	0.713	$	0.924		(23	%)
British pound		1.495		1.975		(24	%)
euro		1.335		1.531		(13	%)
Indian rupee		0.020		0.025		(20	%)
Polish zloty		0.299		0.438		(32	%)

COMPARISON OF OPERATING RESULTS FOR THE THREE- ~~MONTH~~AND SIX-MONTH PERIODS ENDED ~~MARCH 31,~~JUNE 30, 2009 AND 2008

EFT PROCESSING SEGMENT

The following table presents the results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008 for our EFT Processing Segment:

Three Months Ended
March 31, Year-over-Year Change
Increase Increase
(Decrease) (Decrease)
(dollar amounts in thousands) 2009 2008 Amount Percent
Total revenues $ 46,206 $ 48,236 $ (2,030 ) (4 %)

Operating expenses:
Direct operating costs 18,955 21,737 (2,782 ) (13 %)
Salaries and benefits 7,012 7,908 (896 ) (11 %)
Selling, general and administrative 4,147 3,778 369 10 %
Depreciation and amortization 4,182 4,668 (486 ) (10 %)

Total operating expenses 34,296 38,091 (3,795 ) (10 %)

Operating income $ 11,910 $ 10,145 $ 1,765 17 %

Transactions processed (millions) 159.5 168.4 (8.9 ) (5 %)
ATMs as of March 31 9,205 11,917 (2,712 ) (23 %)
Average ATMs 9,397 11,771 (2,374 ) (20 %)

~~Discontinued operations~~

During the second quarter 2008, we decided to sell Euronet Essentis Limited (“Essentis”), a U.K. software entity previously included in the EFT Processing Segment, in order to focus our investments and resources on our transaction processing businesses. We are in the process of selling the business. Accordingly, the results of operations for Essentis are shown as discontinued operations in the Unaudited Consolidated Statements of Operations for all periods presented and have been excluded from the table above.


	Three Months Ended										Six Months Ended
	June 30,				Year-over-Year Change						June 30,				Year-over-Year Change
					Increase			Increase							Increase			Increase
					(Decrease)			(Decrease)							(Decrease)			(Decrease)
(dollar amounts in thousands)	2009		2008		Amount			Percent			2009		2008		Amount			Percent
Total revenues	$	45,592	$	52,361	$	(6,769	)		(13	%)	$	91,798	$	100,597	$	(8,799	)		(9	%)


Operating expenses:
Direct operating costs		19,656		24,625		(4,969	)		(20	%)		38,611		46,362		(7,751	)		(17	%)
Salaries and benefits		7,443		9,113		(1,670	)		(18	%)		14,455		17,021		(2,566	)		(15	%)
Selling, general and administrative		4,157		4,610		(453	)		(10	%)		8,304		8,388		(84	)		(1	%)
Depreciation and amortization		4,537		4,974		(437	)		(9	%)		8,719		9,642		(923	)		(10	%)


Total operating expenses		35,793		43,322		(7,529	)		(17	%)		70,089		81,413		(11,324	)		(14	%)


Operating income	$	9,799	$	9,039	$	760			8	%	$	21,709	$	19,184	$	2,525			13	%


Transactions processed (in millions)		179.3		168.6		10.7			6	%		338.8		337.0		1.8			1	%
ATMs as of June 30		9,336		10,160		(824	)		(8	%)		9,336		10,160		(824	)		(8	%)
Average ATMs		9,280		9,962		(682	)		(7	%)		9,339		10,867		(1,528	)		(14	%)

Revenues

Our revenues for the first ~~quarter~~half of 2009 decreased when compared to the first ~~quarter~~half of 2008 primarily due to the strengthening of the U.S. dollar in the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008 relative to most of the currencies of the countries in which we operate. Because our revenues are recorded in the functional currencies of our operating entities, amounts we earn in foreign currencies are negatively impacted by the strengthening of the U.S. dollar. Additionally, the decrease in the number of ATMs operated, which is primarily due to the expiration or termination of ATM services contracts discussed in more detail in the following paragraphs, contributed to our revenue decrease. Partly offsetting these decreases were contract termination fees totaling $4.4 million and increases in revenues primarily associated with our operations in India and our software business. ~~The increase in revenues in the first quarter 2009 associated with our software business was primarily due to the sale of a significant license to an entity in which Euronet has a 10% stake.~~

Average monthly revenue per ATM was ~~$1,639~~$1,638 for the second quarter and first half of 2009, compared to $1,752 for the second quarter and $1,543 for the first half of 2008. The decrease in the second quarter of 2009 ~~compared to $1,366 for~~from the second quarter of 2008 is mainly driven by the impact of the stronger U.S. dollar. The improvement in the first ~~quarter~~half of 2009 from the same period in 2008 ~~and revenue per transaction was $0.29 for both the first quarter 2009 and 2008. The increase in revenue per ATM~~ is generally the result of the non-recurring contract termination fees discussed above and the expiration of an ATM services contract in the U.K. at the end of the first quarter 2008. The U.K. contract involved processing services only with very little associated costs and, therefore, had lower-than-average revenue per ATM. AsRevenue per transaction was $0.25 for the second quarter and $0.27 for the first half of ~~March 31, 2008, we were providing processing services~~2009, compared to $0.31 for ~~approximately 2,400 ATMs under this contract prior to its expiration. Partly offsetting~~ the ~~improvement in average revenue per ATM is~~second quarter and $0.30 for the ~~addition~~first half of ~~ATMs~~2008. These decreases are primarily the result of the impact of the stronger U.S. dollar and the growth of transactions in India and China, where revenues per ~~ATM~~transaction have been historically lower than Central and Eastern Europe (due to lower labor costs). During the first half of 2009, transactions on Euronet’s shared network in India, Cashnet, increased 138% when compared to the first half of 2008.

Our existing contracts generally have terms of five to seven years and a number of them will expire or be up for renewal each year for the next few years. As a result, we expect to be regularly engaged in discussions with one or more of our customer banks to either ~~obtain renewal of,~~renew or restructure our ATM outsourcing agreements. During the fourth quarter 2008 and first quarter 2009, certain customer contracts were terminated or expired, resulting in a decrease of approximately 1,700 ATMs. Most of the ATM reductions resulted from bank customers shifting their processing to related processing subsidiaries in contemplation of selling the subsidiaries to raise capital, rather than the loss of contracts to competitors. The reduction in the number of ATMs from contract terminations or expirations was partially offset during the first half of 2009 by increases in ATMs driven under new contracts, expansion of ATMs under existing contracts and the deployment of ATMs in markets where we operate Euronet-branded ATMs.

For contracts that we are able to renew, as was the case for contract renewals in Romania and Greece in prior years, we expect customers to seek rate concessions or up-front payments because of the greater availability of alternative processing solutions in many of our markets now, as compared to when we originally entered into the contracts. Excluding the ~~expiring~~expired or terminated contracts discussed above, we have been able to renew or extend most of the remaining contracts that ~~came up for renewal in 2008 or~~ were due to expire in 2009. While we have been successful in many cases in obtaining new terms that preserve the same level of earnings arising from the agreements, we have not been successful in all cases and, therefore, we expect to experience reductions in revenues in future quarters arising from the expiration or restructuring of agreements.

For the contracts that expired during the fourth quarter 2008 and first quarter 2009, excluding the substantial termination fees described above, we estimate that the impact to 2009 will be a reduction in revenues of approximately $15 million to $16 million, resulting in reduced operating income of approximately $3 million to $4 million. We cannot be sure we will have sufficient revenues from new contracts to offset potential revenue reductions from expired or restructured agreements.

Direct operating costs

Direct operating costs consist primarily of site rental fees, cash delivery costs, cash supply costs, maintenance, insurance, telecommunications and the cost of data center operations-related personnel, as well as the processing centers’ facility related costs and other processing center related expenses. The decrease in direct operating ~~costs~~cost for the first ~~quarter~~half of 2009, compared to the first ~~quarter~~half of 2008, is attributed to the impact of the ~~strengthening~~stronger U.S. dollar and the decrease in the number of ATMs under operation.

Gross profit

Gross profit, which is calculated as revenues less direct operating costs, ~~increased~~decreased to ~~$27.3~~$25.9 million for the second quarter and $53.2 million for the first ~~quarter~~half of 2009 from ~~$26.5~~$27.7 million for the second quarter and $54.2 million for the first ~~quarter~~half of 2008. ~~This increase is~~These decreases are mainly attributable to the impact of the stronger U.S. dollar, partly offset by the contract termination fee revenues discussed ~~above, partly offset by~~above. Gross margin was 57% for the ~~impact of the strengthening U.S. dollar. Gross profit as a percentage of revenues (“gross margin”) was 59%~~second quarter and 58% for the first ~~quarter~~half of 2009 compared to ~~55%~~53% for the second quarter and 54% for the first ~~quarter 2008 mainly as a result~~half of 2008. The increases in gross margin are primarily due to the ~~non-recurring~~previously mentioned contract termination fees ~~discussed above, partly offset by increased contributions of our subsidiaries~~and gross margin improvements in India and ~~China, which have historically earned a lower gross margin than~~ our ~~other operations.~~cross-border merchant processing and acquiring business.

Salaries and benefits

The decrease in salaries and benefits for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008 ~~was~~is primarily due to the impact of the ~~strengthening~~stronger U.S. dollar discussed ~~above, partly offset by increased staffing costs to support growth in ATMs managed in India and China as well as costs resulting from general merit increases awarded to employees.~~above. As a percentage of revenues these costs decreased to ~~15%~~16% of revenues for the first ~~quarter~~half of 2009 compared to ~~16%~~17% for the first ~~quarter~~half of 2008.

Selling, general and administrative

~~The increase in selling,~~Selling, general and administrative expenses were flat for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008, ~~is due primarily to~~reflecting increased expenses incurred in connection with growth in India and China and in our cross-border merchant processing and acquiring ~~business. Partly offsetting these increases is~~business being largely offset by the impact of the ~~strengthening~~stronger U.S. ~~dollar discussed above.~~dollar. The growth in selling, general and administrative expense associated with the cross-border merchant processing and acquiring business was less pronounced in the second quarter of 2009 than in the first half of 2009 compared to same periods in 2008 as the business launched in the second quarter of 2008. As a percentage of ~~revenues,~~revenue, selling, general and administrative expenses ~~were~~increased slightly to 9% for the first ~~quarter~~half of 2009 compared to 8% for the first ~~quarter~~half of 2008.

~~Operating income~~

The increase in operating income ~~was~~and operating margin is primarily due to the substantial contract termination revenues described above and the improvements in India, partly offset by the impact of the ~~strengthening~~stronger U.S. dollar. Operating income ~~as a percentage of revenues for the first quarter 2009 was 26%, compared to 21% for the first quarter 2008, and operating income~~ per transaction was ~~$0.07~~$0.06 for both the first ~~quarter~~half of 2009 ~~compared to $0.06 per transaction for the first quarter~~and 2008.

PREPAID PROCESSING SEGMENT

The following table presents the results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008 for our Prepaid Processing Segment:


	Three Months Ended										Three Months Ended										Six Months Ended
	March 31,				Year-over-Year Change						June 30,				Year-over-Year Change						June 30,				Year-over-Year Change
					Increase			Increase							Increase			Increase							Increase			Increase
					(Decrease)			(Decrease)							(Decrease)			(Decrease)							(Decrease)			(Decrease)
(dollar amounts in thousands)	2009		2008		Amount			Percent			2009		2008		Amount			Percent			2009		2008		Amount			Percent
Total revenues	$	134,523	$	144,225	$	(9,702	)		(7	%)	$	145,253	$	152,633	$	(7,380	)		(5	%)	$	279,776	$	296,858	$	(17,082	)		(6	%)


Operating expenses:
Direct operating costs		109,035		117,856		(8,821	)		(7	%)		117,342		124,604		(7,262	)		(6	%)		226,377		242,460		(16,083	)		(7	%)
Salaries and benefits		6,424		6,568		(144	)		(2	%)		6,793		6,916		(123	)		(2	%)		13,217		13,484		(267	)		(2	%)
Selling, general and administrative		4,542		5,275		(733	)		(14	%)		5,409		5,459		(50	)		(1	%)		9,951		10,734		(783	)		(7	%)
Depreciation and amortization		3,646		4,192		(546	)		(13	%)		3,598		4,234		(636	)		(15	%)		7,244		8,426		(1,182	)		(14	%)


Total operating expenses		123,647		133,891		(10,244	)		(8	%)		133,142		141,213		(8,071	)		(6	%)		256,789		275,104		(18,315	)		(7	%)


Operating income	$	10,876	$	10,334	$	542			5	%	$	12,111	$	11,420	$	691			6	%	$	22,987	$	21,754	$	1,233			6	%


Transactions processed (millions)		184.3		167.3		17.0			10	%
Transactions processed (in millions)												194.2		169.5		24.7			15	%		378.5		336.8		41.7			12	%

Gross profit

Gross profit, which represents revenues less direct costs, was ~~$25.5~~$27.9 million for the second quarter and $53.4 million for the first ~~quarter~~half of 2009 compared to ~~$26.4~~$28.0 million for the second quarter and $54.4 million for the first ~~quarter~~half of 2008. Gross margin increased slightly to 19% for the second quarter and first ~~quarter~~half of 2009 compared to 18% for the ~~first quarter 2008 and gross~~same periods in 2008. Gross profit per transaction ~~decreased to~~was $0.14 for the second quarter and first ~~quarter~~half of 2009 compared to $0.17 for the second quarter and $0.16 for the first ~~quarter~~half of 2008. The primary cause of the reduction in gross profit per transaction is the impact of the ~~strengthening~~stronger U.S. dollar.

Salaries and benefits

The decrease in salaries and benefits for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008 is primarily due to the impact of the ~~strengthening~~stronger U.S. dollar, partly offset by additional overhead to support development in new and growing markets. As a percentage of revenues, salaries and benefits increased slightly to ~~4.8%~~4.7% for the first ~~quarter~~half of 2009 from ~~4.6%~~4.5% for the first ~~quarter~~half of 2008.

Selling, general and administrative

The decrease in selling, general and administrative expenses for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008 is due to the impact of the ~~strengthening~~stronger U.S. dollar, partly offset by additional overhead to support development in ~~other~~ new and growing markets. As a percentage of revenues, these expenses ~~decreased to 3.4% for first quarter 2009 from 3.7%~~remained flat at 3.6% for the first ~~quarter~~half of 2009 compared to the first half of 2008.

Depreciation and amortization

Depreciation and amortization expense primarily represents amortization of acquired ~~intangibles~~intangible assets and the depreciation of POS terminals we install in retail stores. Depreciation and amortization expense decreased for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008 mainly due to the impact of the ~~strengthening~~stronger U.S. dollar. As a percentage of revenues, these expenses decreased to ~~2.7%~~2.6% for the first ~~quarter~~half of 2009 from ~~2.9%~~2.8% for the first ~~quarter~~half of 2008.

Operating income

The improvement in operating income for 2009 compared to 2008 ~~was~~is due to the growth in transactions processed, partly offset by the impact of foreign currency translations to the U.S. dollar.

Operating income as a percentage of revenues was ~~8.1%~~8.3% for the second quarter and 8.2% for the first ~~quarter~~half of 2009 compared to ~~7.2%~~7.5% for the second quarter and 7.3% for the first ~~quarter~~half of 2008. The increase is primarily due to the increase in transactions processed and the associated leveraging of fixed costs. Operating income per transaction ~~remained~~was relatively flat at $0.06 for ~~both~~the second quarter and first half of 2009 compared to $0.07 for the second quarter and $0.06 for the first half of 2008. The flatness in 2009 ~~and 2008 reflecting~~reflects the leveraging of fixed costs offsetting the negative impact of the ~~strengthening~~stronger U.S. dollar.

2225

MONEY TRANSFER SEGMENT

The following tables present the results of operations for the ~~three-month~~three- and six-month periods ended ~~March 31,~~June 30, 2009 and 2008 for the Money Transfer Segment:


												Three Months Ended										Six Months Ended
	Three Months Ended March 31,					Year-over-Year Change						June 30,				Year-over-Year Change						June 30,					Year-over-Year Change
						Increase			Increase							Increase			Increase								Increase			Increase
						(Decrease)			(Decrease)							(Decrease)			(Decrease)								(Decrease)			(Decrease)
(dollar amounts in thousands)	2009			2008		Amount			Percent			2009		2008		Amount			Percent			2009			2008		Amount			Percent
Total revenues	$	52,968		$	52,332	$	636			1	%	$	57,769	$	59,456	$	(1,687	)		(3	%)	$	110,737		$	111,788	$	(1,051	)		(1	%)


Operating expenses:
Direct operating costs		25,558			26,345		(787	)		(3	%)		28,055		30,196		(2,141	)		(7	%)		53,613			56,541		(2,928	)		(5	%)
Salaries and benefits		11,820			11,757		63			1	%		13,103		13,035		68			1	%		24,923			24,792		131			1	%
Selling, general and administrative		8,815			7,452		1,363			18	%		8,847		8,577		270			3	%		17,662			16,029		1,633			10	%
Goodwill and acquired intangible assets impairment		9,884			—		9,884			n/m			—		—		—			n/m			9,884			—		9,884			n/m
Depreciation and amortization		4,762			4,827		(65	)		(1	%)		5,083		5,090		(7	)		(0	%)		9,845			9,917		(72	)		(1	%)


Total operating expenses		60,839			50,381		10,458			21	%		55,088		56,898		(1,810	)		(3	%)		115,927			107,279		8,648			8	%


Operating income (loss)	$	(7,871	)	$	1,951	$	(9,822	)		n/m		$	2,681	$	2,558	$	123			5	%	$	(5,190	)	$	4,509	$	(9,699	)		n/m


Transactions processed (millions)		4.0			3.8		0.2			5	%
Transactions processed (in millions)													4.5		4.3		0.2			5	%		8.5			8.1		0.4			5	%

Revenues from the Money Transfer Segment include a transaction fee for each transaction as well as the difference between purchasing currency at wholesale exchange rates and selling the currency to customers at retail exchange rates. ~~Revenue~~Revenues per transaction decreased to ~~$13.24~~$12.84 for the second quarter and $13.03 for the first ~~quarter~~half of 2009 from ~~$13.77~~$13.83 for the second quarter and $13.80 for the first ~~quarter~~half of 2008. The growth rate of revenues lagged the transaction growth rate largely as a result of the impact of the ~~strengthening~~stronger U.S. dollar. Because our revenues are recorded in the functional currencies of our operating entities, amounts we earn in foreign currencies are negatively impacted by the strengthening of the U.S. dollar. This decrease was partly offset by a strong increase in transfers from non-U.S. locations which generally have higher-than-average ~~revenue~~revenues per transaction. For the ~~first quarter~~six months ended June 30, 2009, ~~65%~~66% of our money transfers were initiated in the U.S., ~~32%~~31% in Europe and 3% in other countries, such as Canada and Australia. This compares to 70% initiated in the U.S., 28% initiated in Europe and 2% ~~initiated~~ in other countries for the ~~first quarter~~six months ended June 30, 2008. We expect that the U.S. will continue to represent our highest volume market; however, future growth is expected to be derived ~~largely~~ from non-U.S. initiated sources.

Gross profit

Gross profit, which represents revenues less direct costs, was ~~$27.4~~$29.7 million for the second quarter and $57.1 million for the first ~~quarter~~half of 2009 compared to ~~$26.0~~gross profit of $29.3 million for the second quarter and $55.2 million for the first ~~quarter~~half of 2008. ~~This improvement is~~The improvements are primarily due to the growth in money transfer transactions, ~~particularly in Company-owned stores discussed above.~~partly offset by the impact of the stronger U.S. dollar related to money transfers originated outside the U.S. As discussed above, certain competitors have been lowering transaction fees and foreign currency exchange spreads in the U.S. market as a result of the economic factors and immigration developments impacting the U.S. market. We have generally maintained our pricing structure in response to these developments. We cannot predict how long these issues will continue to ~~affect~~impact the U.S. market or whether other markets will experience similar issues and we cannot predict whether we will change our pricing strategy over the short or long term in order to protect or increase market share. Gross margin ~~as a percentage of revenues~~ was 51% for the second quarter and 52% for the first ~~quarter~~half of 2009 compared to ~~50%~~49% for the second quarter and first ~~quarter~~half of 2008. ~~The~~This improvement primarily reflects the strong growth in transaction volume in our more profitable non-U.S. locations.

Salaries and benefits

Salaries and benefits include salaries and commissions paid to employees, the cost of providing employee benefits, amounts paid to contract workers and accruals for incentive compensation. While salaries and benefits were basically flat ~~for~~in the first ~~quarter~~half of 2009 compared to salaries and benefits expense for the ~~first quarter~~same period in 2008, the impact of the ~~strengthening~~stronger U.S. dollar largely offset the increased expenditures we incurred to support expansion of our operations, primarily internationally.

Selling, general and administrative

Selling, general and administrative expenses include operations support costs, such as rent, utilities, professional fees, indirect telecommunications, advertising and other miscellaneous overhead costs. The increase in selling, general and administrative expenses for the first ~~quarter~~half of 2009 compared to selling, general and administrative expenses for the first ~~quarter~~half of 2008 is primarily the result of increased expenditures to support expansion of our operations, primarily internationally, partly offset by the impact of the ~~strengthening~~stronger U.S. dollar.

Goodwill and acquired intangible assets impairment

In the fourth quarter of 2008, we recorded a non-cash impairment charge of $169.4 million related to certain goodwill and intangible assets of the RIA money transfer business in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible ~~Assets”~~Assets,” and SFAS No. 144, “Accounting for the Impairment of Disposal of Long-Lived Assets.” This charge was an estimate based on the assessment performed up to the filing date of our 2008 Annual Report on Form 10-K. We completed the assessment in the first quarter of 2009 and recorded an additional $9.9 million non-cash impairment charge in the first quarter of 2009. Should ~~the current~~ economic ~~crisis worsen~~ or ~~should~~ other factors cause us to significantly lower our cash flow projections for our money transfer business, we will need to reassess the business for further possible impairment. See Note 5, Goodwill and Acquired Intangible Assets, Net, to the Unaudited Consolidated Financial Statements for a further discussion of this charge.

Depreciation and amortization

Depreciation and amortization primarily represents amortization of acquired ~~intangibles~~intangible assets and also includes depreciation of money transfer terminals, computers and software, leasehold improvements and office equipment. While depreciation and amortization was essentially flat for the first ~~quarter~~half of 2009 compared to the first ~~quarter~~half of 2008, the impact of the ~~strengthening~~stronger U.S. dollar largely offset increased charges related to additional computer equipment in our customer service centers and increased leasehold improvements, office equipment and computer equipment for expansion of our company stores.

Operating income

Excluding the goodwill and acquired intangible assets impairment charge, operating income for the first ~~quarter~~half of 2009 ~~was flat~~increased $0.2 million compared to the first ~~quarter~~half of 2008. This increase reflects the growth in transactions processed, mainly those originated in non-U.S. locations, ~~which was~~partly offset by ~~the impact of the strengthening U.S. dollar and~~increased costs to expand internationally ~~as discussed in more detail in~~and the ~~sections above.~~negative impact of the stronger U.S. dollar.

2427

~~Unrealized~~Impairment loss on investment securities

During the first ~~quarter~~half of 2008, the value of our investment in MoneyGram declined and the decline was determined to be other than temporary. Accordingly, we recognized aan $18.8 million impairment loss, of which $17.5 million ~~impairment loss.~~was recognized in the first quarter and another $1.3 million in the second quarter.

Loss on early retirement of debt

In ~~March~~the first half of 2009, we repurchased in privately negotiated transactions ~~$10.8~~$25.8 million in principal amount of the 1.625% convertible debentures due 2024. Loss on early retirement of debt of ~~$0.1~~$0.3 million for the first ~~quarter~~half of 2009 represents the difference in the amounts paid for the convertible debentures over their carrying amounts as well as the pro-rata write-off of deferred financing costs associated with the portion of the term loan that was prepaid during the first ~~quarter~~half of 2009. The $0.2 million loss for the first ~~quarter~~half of 2008 is associated with the term loan amount that was prepaid during the first ~~quarter~~half of 2008. We expect to continue to use available cash flows to prepay amounts outstanding under the term loan and to repurchase the 1.625% convertible debentures if attractive terms are available.

~~Net foreign~~Foreign currency exchange gain (loss), net

Assets and liabilities denominated in currencies other than the local currency of each of our subsidiaries give rise to foreign currency exchange gains and losses. Exchange gains and losses that result from re-measurement of these assets and liabilities are recorded in determining net income. The majority of our foreign currency gains or losses are due to the re-measurement of intercompany loans that are in a currency other than the functional currency of either the entity making or receiving the loan. For example, we make intercompany loans based in euros from our corporate division, which is comprised of U.S. dollar functional currency entities, to certain European entities that use the euro as the functional currency. As the U.S. dollar strengthens against the euro, foreign currency ~~loses~~losses are generated on our corporate entities because the number of euros to be received in settlement of the loans decreases in U.S. dollar terms. Conversely, in this example, in periods where the U.S. dollar weakens, our corporate entities will record foreign currency gains.

We recorded a net foreign currency exchange ~~loss~~gain of ~~$10.6~~$9.7 million in the ~~first~~second quarter of 2009 and a net foreign currency ~~gain~~loss of ~~$13.1~~$0.9 million in the first half of 2009 compared to a $0.4 million loss and a $12.7 million gain in the second quarter ~~2008. During~~and first half of 2008, respectively. These realized and unrealized foreign currency exchange gains and losses reflect the ~~first quarter 2009,~~respective weakening and strengthening of the U.S. dollar ~~strengthened~~ against most of the currencies of the countries in which we operate ~~creating realized and unrealized foreign currency exchange losses. This compares to~~during the ~~first quarter 2008, when the U.S. dollar weakened against these currencies and we, therefore, recorded realized and unrealized foreign currency exchange gains.~~respective periods.

2629

INCOME TAX EXPENSE

Our effective tax rates as reported and as adjusted are calculated below:


	Three Months Ended
	March 31,						Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2009			2008			2009			2008			2009			2008
Income (loss) from continuing operations before income taxes		(6,576	)		2,814
Income from continuing operations before income taxes								22,272			8,763			15,696			11,577
Income tax expense		5,317			10,087			6,397			1,662			11,714			11,749


Loss from continuing operations	$	(11,893	)	$	(7,273	)
Income (loss) from continuing operations							$	15,875		$	7,101		$	3,982		$	(172	)


Effective income tax rate		(80.9	%)		358.5	%		28.7	%		19.0	%		74.6	%		101.5	%


Income (loss) from continuing operations before income taxes	$	(6,576	)	$	2,814
Income from continuing operations before income taxes							$	22,272		$	8,763		$	15,696		$	11,577
Adjust: Foreign currency exchange gain (loss), net		(10,591	)		13,077			9,650			(378	)		(941	)		12,699
Adjust: Goodwill and acquired intangible assets impairment		(9,884	)		—			—			—			(9,884	)		—
Adjust: Impairment loss on investment securities		—			(17,502	)		—			(1,258	)		—			(18,760	)

Income from continuing operations before income taxes, foreign currency exchange gain (loss), net and impairment charges	$	13,899		$	7,239		$	12,622		$	10,399		$	26,521		$	17,638


Income tax expense	$	5,317		$	10,087		$	6,397		$	1,662		$	11,714		$	11,749
Adjust: Income tax expense (benefit) attributable to foreign currency exchange gain (loss), net		(470	)		8,054			485			(441	)		14			7,614


Income tax expense, as adjusted	$	5,787		$	2,033		$	5,912		$	2,103		$	11,700		$	4,135


Effective income tax rate, as adjusted		41.6	%		28.1	%		46.8	%		20.2	%		44.1	%		23.4	%

The ~~increase~~increases in the effective tax ~~rate,~~rates, as adjusted, for the second quarter and first ~~quarter~~half of 2009 compared to the same periods in 2008 are primarily related to our U.S. tax position. For the three- and six-month periods ended June 30, 2009, we have recorded a valuation allowance against our U.S. federal tax net operating losses as we have determined that it is more likely than not that a tax benefit will not be realized. Accordingly, the federal income tax benefit associated with pre-tax book losses generated by our U.S. entities has not been recognized in these periods. For the three- and six-month periods ended June 30, 2008, no valuation allowance was recorded against our U.S. federal tax net operating losses, resulting in a tax benefit associated with the pre-tax loss generated by our U.S. operations. Additional reasons for the increases in the effective tax rates include the accrual of incremental state income tax expense in the first six months of 2009 compared to the same period in 2008, ~~was primarily related~~mainly due to exhausting certain state net operating losses, and the recognition of a one-time tax benefit in the first half of 2008 resulting from the successful conclusion of a tax audit in one of our foreign jurisdictions. Finally, the loss of certain income tax deductions in Spain as a result of the goodwill and acquired intangible assets impairment ~~charges. Also, approximately $3.5 million~~charges increased income tax expense in the first half of ~~contract termination fees were recorded in India which has a tax rate that is higher than our weighted average effective tax rate.~~2009.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests was ~~$0.3 million and $0.6~~$0.5 million for the second quarter and $0.7 million for the first half of 2009 compared to $0.8 million for the second quarter ~~2009~~ and ~~2008, respectively.~~$1.2 million for the first half of 2008. Noncontrolling interests represents the elimination of net income or loss attributable to the minority shareholders’ portion of ~~our~~the following consolidated subsidiaries that are not ~~wholly-owned. Our subsidiaries which are not wholly-owned are summarized in the table below:~~wholly-owned:


	Percent
Subsidiary	Owned		Segment
Movilcarga		80	%80%	Prepaid - Spain
e-pay SRL		51	%51%	Prepaid - Italy
ATX		51	%51%	Prepaid - various
Euronet China		75	%75%	EFT - China

NET ~~LOSS~~INCOME (LOSS) ATTRIBUTABLE TO EURONET WORLDWIDE, INC.

Net ~~loss~~income attributable to Euronet Worldwide, Inc. was ~~$12.3~~$15.5 million for the second quarter and $3.2 million for the first ~~quarter~~half of 2009 compared to ~~$8.6~~$5.9 million for the second quarter 2008 and a net loss of $2.7 million for the first ~~quarter~~half of 2008. As more fully discussed above, the ~~increased loss~~increase of ~~$3.7~~$6.0 million for the first half of 2009 as compared to the same period in 2008 was primarily the result of the ~~$23.7 million increase in foreign currency losses and the $3.5 million decrease in operating income. These were partly offset by the $17.5~~$18.8 million first ~~quarter~~half 2008 unrealized loss on investment securities, ~~along with a $4.8~~partly offset by the $13.6 million decrease in foreign currency exchange gains. Additionally, operating income ~~tax~~decreased $2.8 million, net interest expense ~~a $0.8~~decreased $1.3 million, ~~decrease in loss~~net income from discontinued operations increased $1.4 million and other items ~~totaling $0.4~~increased net income by $0.9 million.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of ~~March 31,~~June 30, 2009, we had working capital, which is calculated as the difference between total current assets and total current liabilities, of ~~$80.1~~$89.3 million, compared to working capital of $99.1 million as of December 31, 2008. Our ratio of current assets to current liabilities was ~~1.16 at March 31, 2009, compared to~~ 1.17 as of June 30, 2009 and December 31, 2008. The decrease in working capital was due primarily to the use of cash to reduce ~~revolving credit facility borrowings.~~debt.

We require substantial working capital to finance operations. The Money Transfer Segment funds the correspondent distribution network before receiving the benefit of amounts collected from customers by agents. Working capital needs increase due to weekends and international banking holidays. As a result, we may report more or less working capital for the Money Transfer Segment based solely upon the fiscal period ending on a particular day. As of ~~March 31,~~June 30, 2009, working capital in the Money Transfer Segment was ~~$42.5~~$65.7 million. We expect that working capital needs will increase as we expand this business. The Prepaid Processing Segment produces positive working capital, but much of it is restricted in connection with the administration of its customer collection and vendor remittance activities. The EFT Processing Segment does not require substantial working capital.

Operating cash flow

Cash flows provided by operating activities were ~~$15.1~~$50.0 million for the first ~~quarter~~half of 2009 compared to ~~$14.6~~$57.7 million for the first ~~quarter~~half of 2008. The ~~slight increase was~~decrease is primarily due to amounts paid to secure an exclusive, long-term distribution agreement with a vendor in Australia, partly offset by fluctuations in working capital primarily associated with the timing of the settlement process with mobile operators in the Prepaid Processing ~~Segment and improved operating results adjusted for non-cash items, partly offset by amounts paid to secure an exclusive, long-term distribution agreement with a vendor in Australia.~~Segment.

Investing activity cash flow

Cash flows used byin investing activities were ~~$10.6~~$28.4 million for the first ~~quarter~~half of 2009, compared to cash flows provided of ~~$13.5~~$0.3 million for the first ~~quarter~~half of 2008. Our investing activities ~~include $6.6~~included $16.8 million and ~~$10.0~~$21.2 million for purchases of property and equipment in the first ~~quarter~~half of 2009 and 2008, respectively. Additionally, the first ~~quarter~~half of 2009 included ~~$3.3~~$10.0 million in cash used for acquisitions compared to ~~$1.8~~$3.5 million for the first ~~quarter~~half of 2008. Our investing activities for the first ~~quarter~~half of 2008 ~~consisted of~~included the return of $26 million we placed in escrow in ~~first quarter~~ 2007 in connection with the agreement to acquire Envios de Valores La Nacional Corp. (“La Nacional”). On January 10, 2008, we entered into a settlement agreement with La Nacional and its stockholder evidencing the parties’ mutual agreement not to consummate the acquisition, in exchange for payment by Euronet of a portion of the legal fees incurred by La Nacional. Finally, cash used for software development and other investing activities totaled ~~$0.6 million and $0.8~~$1.6 million in the first ~~quarter~~half of 2009 and ~~2008, respectively.~~$1.0 million in the first half of 2008.

compared to ~~$63.1~~$74.9 million infor the first ~~quarter~~half of 2008. To support the short-term cash needs of our Money Transfer Segment, we generally borrow amounts under the revolving credit facility several times each month to fund the correspondent network in advance of collecting remittance amounts from the agency network. These borrowings are repaid over a very short period of time, generally within a few days. Primarily as a result of this, during the first ~~quarter~~half of 2009 we had a total of ~~$90.4~~$285.4 million in borrowings and ~~$98.4~~$297.2 million in repayments under our revolving credit facility. During the first ~~quarter~~half of 2009, we paid ~~$11.4~~$27.1 million for repayments and early retirements of debt ~~obligations.and $1.8~~obligations and $3.1 million for capital lease obligations. Additionally, we paid $2.4 million of dividends to noncontrolling interests stockholders in the first ~~quarter~~half of 2009.

Expected future financing and investing cash requirements primarily depend on our acquisition activity and the related financing needs.

Other sources of capital

Credit Facility —– To finance the acquisition of RIA in the second quarter 2007, we entered into a $290 million secured credit facility consisting of a $190 million seven-year term loan, which was fully drawn at closing, and a $100 million five-year revolving credit facility (together, the “Credit Facility”). The $190 million seven-year term loan bears interest at LIBOR plus 200 basis points or prime plus 100 basis points and requires that we repay 1% of the ~~outstanding~~original balance each year, with the remaining balance payable after seven years. We estimate that we will be able to repay the term loan prior to its maturity date through cash flows available from operations, provided our operating cash flows are not required for future business developments. ~~Up front financing~~Financing costs of $4.8 million have been deferred and are being amortized over the terms of the respective loans.

During February 2009, we entered into Amendment No. 2 to the Credit Facility to, among other things, (i) provide us the right under the Credit Facility to (a) repurchase the remaining $70 million of 1.625% Convertible Senior Debentures Due 2024 then outstanding and (b) repurchase our 3.5% Convertible Debentures Due 2025 prior to any repurchase date using proceeds of a qualifying refinancing, the proceeds of a qualifying equity issuance or shares of common stock; (ii) revise the definition of Consolidated EBITDA and the covenant regarding maintenance of Consolidated Net Worth to exclude the effect of non-cash charges for impairment of goodwill or other intangible assets for the periods ending December 31, 2008 and thereafter; and (iii) broaden or otherwise modify various definitions or provisions related to ~~Indebtedness, Liens, Permitted Disposition, Debt Transactions, Investments~~indebtedness, liens, permitted disposition, debt transactions, investments and other matters. Additionally, the lenders acknowledged that we have sufficient liquidity with respect to the December 15, 2009 repurchase date for the 1.625% Convertible Senior Debentures. Furthermore, in February 2009, our Board of Directors authorized the repurchase of up to $70 million of the 1.625% Convertible Senior Debentures, from time to time, in open market or privately negotiated purchases. We incurred costs of approximately $1.5 million in connection with the amendment, which will be recognized as additional interest expense over the remaining term of the Credit Facility.

The $100 million five-year revolving credit facility bears interest at LIBOR or prime plus a margin that adjusts each quarter based upon our ~~Consolidated EBITDA ratio as defined in the Credit Facility agreement.~~consolidated total debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. We intend to use the revolving credit facility primarily to fund working capital requirements, which are expected to increase as we expand the Money Transfer business. Based on our current projected working capital requirements, we anticipate that our revolving credit facility will be sufficient to fund our working capital needs.

We may be required to repay our obligations under the Credit Facility six months before any potential repurchase dates, the first being October 15, 2012, under our $175 million 3.5% Convertible Debentures Due 2025, unless we are able to demonstrate that either: (i) we could borrow unsubordinated funded debt equal to the principal amount of the applicable convertible debentures while remaining in compliance with the financial covenants in the Credit Facility or (ii) we will have sufficient liquidity to meet repayment requirements (as determined by the administrative agent and the lenders). The Credit Facility contains four financial covenants that we must meet as defined in the agreement: (1) total debt to EBITDA ratio, (2) senior secured debt to EBITDA ratio, (3) EBITDA to fixed charge coverage ratio and (4) minimum Consolidated Net Worth. These and other material terms and conditions applicable to the Credit Facility are described in the agreement governing the Credit Facility.

The term loan may be expanded by up to an additional $150 million and the revolving credit facility can be expanded by up to an additional $25 million, subject to satisfaction of certain conditions including pro forma debt covenant compliance.

As of ~~March 31,~~June 30, 2009, we had borrowings of ~~$131.0~~$130.0 million outstanding against the term loan. We had borrowings of ~~$8.5~~$5.0 million and stand-by letters of credit of ~~$30.0~~$39.5 million outstanding against the revolving credit facility. The remaining ~~$61.5~~$55.5 million under the revolving credit facility ($~~86.5~~80.5 million if the facility were increased to ~~$125.0~~$125 million) was available for borrowing. Borrowings under the revolving credit facility are being used to fund short-term working capital requirements in the U.S. and India. ~~Our~~As of June 30, 2009, our weighted average interest rate under the revolving credit facility aswas 3.8% and under the term loan was 2.9%, excluding amortization of ~~March 31, 2009 was 4.7%.~~deferred financing costs.

We believe that the short-term debt obligations can be refinanced on terms acceptable to us. However, if acceptable refinancing options are not available, we believe that amounts due under these obligations can be funded through cash generated from operations, together with cash on hand or borrowings under our revolving credit facility.

Convertible debt—– We have $175 million in principal amount of 3.50% Convertible Debentures Due 2025 that are convertible into 4.3 million shares of Euronet Common Stock at a conversion price of $40.48 per share upon the occurrence of certain events (relating to the closing prices of Euronet Common Stock exceeding certain thresholds for specified periods). The debentures may not be redeemed by us until October 20, 2012 but are redeemable at par at any time thereafter. Holders of the debentures have the option to require us to purchase their debentures at par on October 15, 2012, 2015 and 2020, or upon a change in control of the Company. On the maturity date, these debentures can be settled in cash or Euronet Common Stock, at our option, at predetermined conversion rates.

We also have ~~$59.2~~$44.2 million in principal amount of 1.625% Convertible Senior Debentures Due 2024 that are convertible into ~~1.8~~1.3 million shares of Euronet Common Stock at a conversion price of $33.63 per share upon the occurrence of certain events (relating to the closing prices of Euronet Common Stock exceeding certain thresholds for specified periods). The debentures may not be redeemed by us until December 20, 2009 but are redeemable at any time thereafter at par. Holders of the debentures have the option to require us to purchase their debentures at par on December 15, 2009, 2014 and 2019, and upon a change in control of the Company. Unless the price of our Common Stock appreciates substantially before December 15, 2009, we believe it is likely that the holders of the debentures will exercise this option ~~effective December 15, 2009.~~at that date. Based upon our current expectations, we believe we will have sufficient cash available to fund the potential ~~$59.2~~$44.2 million purchase price using our cash currently on hand, cash flows we expect to generate through December 2009 and amounts we expect to be available to borrow under our revolving credit facility. However, if our capital resources are insufficient to meet these obligations, we may be required to seek additional debt or equity financing.

Should holders of the convertible debentures require us to repurchase their debentures on the dates outlined above, we cannot guarantee that we will have sufficient cash on hand or have acceptable financing options available to us to fund these required repurchases. An inability to be able to finance these potential repayments could have an adverse impact on our operations. These terms and other material terms and conditions applicable to the convertible debentures are set forth in the indenture agreements governing these debentures.

Other uses of capital

Payment obligations related to acquisitions- – We have potential contingent obligations to the former owner of the net assets of Movilcarga. Based upon presently available information, we do not believe any additional payments will be required. The seller disputed this conclusion and initiated arbitration as provided for in the purchase agreement. A global public accounting firm was engaged as an independent expert to review the results of the computation, but procedures for such review have never been commenced, principally because the seller is in a bankruptcy proceeding. Any additional payments, if ultimately determined to be owed the seller, will be recorded as additional goodwill and could be made in either cash ofor a combination of cash and Euronet Common Stock at our option.

In connection with the acquisition of Brodos Romania, we agreed to contingent consideration arrangements based on the achievement of certain performance criteria. If the criteria are achieved, during 2009 and 2010, we would have to pay a total of $2.5 million in cash or 75,489 shares of Euronet Common Stock, at the option of the seller. However, based on its current performance, Brodos Romania is unlikely to achieve the performance criteria.

Capital expenditures and needs—– Total capital expenditures for the first ~~quarter~~half of 2009 were ~~$6.7~~$17.4 million. These capital expenditures were primarily for the purchase of ATMs to meet contractual requirements in Poland, India and China, the purchase and installation of ATMs in key under-penetrated markets, the purchase of POS terminals for the Prepaid Processing and Money Transfer Segments, and office, data center and company store computer equipment and software, including capital expenditures for the purchase and development of the necessary processing systems and capabilities to ~~enter~~expand the cross-border merchant processing and acquiring business. Total capital expenditures for 2009 are ~~currently~~ estimated to be approximately ~~$35~~$40 million to ~~$45~~$50 million.

In the Prepaid Processing Segment, approximately ~~100,000~~115,000 of the approximately ~~421,000~~470,000 POS devices that we operate are Company-owned, with the remaining terminals being operated as integrated cash register devices of our major retail customers or owned by the retailers. As our Prepaid Processing Segment expands, we will continue to add terminals in certain independent retail locations at a price of approximately $300 per terminal. We expect the proportion of owned terminals to total terminals operated to remain relatively constant.

Other trends and uncertainties

Cross border merchant processing and acquiring —– In our EFT Processing Segment, we have entered the cross-border merchant processing and acquiring business, through the execution of an agreement with a large petrol retailer in Central Europe. Since the beginning of 2007, we have devoted significant resources, including capital expenditures of approximately ~~$7.8~~$8.5 million, to the ongoing investment in development of the necessary processing systems and capabilities to enter this business, which involves the purchase and design of hardware and software. Merchant acquiring involves processing credit and debit card transactions that are made on POS terminals, including authorization, settlement, and processing of settlement files. It will involve the assumption of credit risk, as the principal amount of transactions will be settled to merchants before settlements are received from card associations. We incurred ~~$1.0~~$1.5 million in operating losses related to this business in the first ~~quarter~~half of 2009 and currently expect to incur approximately ~~$3.0~~$2 million to ~~$4.0~~$3 million in operating losses for the full year 2009.

Inflation and functional currencies

Generally, the countries in which we operate have experienced low and stable inflation in recent years. Therefore, the local currency in each of these markets is the functional currency. Currently, we do not believe that inflation will have a significant effect on our results of operations or financial position. We continually review inflation and the functional currency in each of the countries where we operate.

OFF BALANCE SHEET ARRANGEMENTS

We regularly grant guarantees of the obligations of our wholly-owned subsidiaries and we sometimes enter into agreements with unaffiliated third parties that contain indemnification provisions, the terms of which may vary depending on the negotiated terms of each respective agreement. Our liability under such indemnification provisions may be subject to time and materiality limitations, monetary caps and other conditions and defenses. As of ~~March 31,~~June 30, 2009, there were no material changes from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2008. To date, we are not aware of any significant claims made by the indemnified parties or parties to whom we have provided guarantees on behalf of our subsidiaries and, accordingly, no liabilities have been recorded as of ~~March 31,~~June 30, 2009. See also Note 10, Guarantees, to the Unaudited Consolidated Financial Statements.

CONTRACTUAL OBLIGATIONS

As of ~~March 31,~~June 30, 2009, the only material change from the disclosure relating to contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, 2008, is the net reduction of ~~$19.4~~$38.8 million of principal on long-term ~~debt through repayment of debt and repurchases of debentures.~~debt.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In ~~April~~May 2009, the FASB issued ~~FSP FAS 141(R)-1, “Accounting~~SFAS No. 165, “Subsequent Events.” This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards, but the rules concerning recognition and disclosure of subsequent events will remain essentially unchanged. SFAS No. 165 provides general standards of accounting for ~~Assets Acquired~~ and ~~Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP FAS 141(R)-1 amends~~disclosure of events that occur after the ~~requirements~~balance sheet date but before financial statements are issued or are available to ~~measure contingencies acquired in a business combination at fair value, requiring that a contingency acquired in a business combination~~ be ~~initially measured at fair value on~~issued. We adopted the acquisition date if fair value can be determined during the measurement period. Acquired contingencies whose fair value cannot be determined during the measurement period would be recognized if it is probable that an asset existed or liability had been incurred at the acquisition date and the amount for that asset or liability can be reasonably estimated. FSP FAS 141(R)-1 is effective for Euronet beginning January 1, 2009, concurrent with the adoptionprovisions of SFAS No. ~~141(R), and it~~165 for the quarter ended June 30, 2009. The adoption of these provisions did not have a material ~~impact~~effect on the Consolidated Financial Statements.

In ~~April~~June 2009, the FASB issued ~~FSP FAS 107-1~~SFAS No. 168, “The FASB Accounting Standards Codification™ and ~~APB 28-1, “Interim Disclosures about Fair Value~~the Hierarchy of ~~Financial Instruments,~~Generally Accepted Accounting Principles.” SFAS No. 168 authorizes theFASB Accounting Standards Codification™ (“Codification”) to become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws remain sources of authoritative GAAP for SEC registrants. On the effective date of SFAS No. 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. All guidance contained in the Codification carries an equal level of authority. Certain accounting treatments that entities have followed, and continue to follow, which ~~requires~~are not part of the ~~annual fair value disclosures about financial instruments within~~Codification are grandfathered because they were adopted before a certain date or certain accounting standards have allowed for the ~~scope~~continued application of ~~FAS 107 to also be made in interim financial statements. FSP FAS 107-1 and APB 28-1~~superseded accounting standards. SFAS No. 168 is effective for ~~Euronet~~financial statements issued for ~~the quarterly reporting period~~interim and annual periods ending ~~June 30,~~after September 15, 2009. ~~The Company’s~~Our adoption of ~~FSP FAS 107-1 and APB 28-1~~SFAS No. 168 is not expected to have a material impact on the Consolidated Financial Statements. However, all references to U.S. GAAP recognized by the FASB will use Codification citations except for those to grandfathered accounting literature.


•		the adequacy of capital to meet our capital requirements and expansion plans;

•		the assumptions underlying our business plans;

•		~~Our~~our ability to repay indebtedness;

•		business strategy;

•		government regulatory action;

•		technological advances; and

•		projected costs and revenues.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Forward-looking statements are typically identified by the words believe, expect, anticipate, intend, estimate and similar expressions.

Investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may materially differ from those in the forward-looking statements as a result of various factors, including, but not limited to, those referred to above and as set forth and more fully described in Part I, Item 1A —– Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2008.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

As of ~~March 31,~~June 30, 2009, our total debt outstanding was ~~$354.1~~$337.1 million. Of this amount, ~~$206.1~~$193.8 million, or 58% of our total debt obligations, relates to contingent convertible debentures having fixed coupon rates. Our $175 million principal amount of contingent convertible debentures, issued in October 2005, accrue cash interest at a rate of 3.50% of the principal amount per annum. The ~~$59.2~~$44.2 million principal amount of contingent convertible debentures, issued in December 2004, accrue cash interest at a rate of 1.625% of the principal amount per annum. Based on quoted market prices, as of ~~March 31,~~June 30, 2009, the fair value of our fixed rate convertible debentures was ~~$183.9~~$196.2 million, compared to a carrying value of ~~$206.1~~$193.8 million.

~~Through the use~~Interest expense, including amortization of ~~interest rate swap agreements, $50.0 million of our variable rate term~~deferred debt ~~has been effectively converted to a fixed rate of 7.3% through May 29, 2009. As of March 31, 2009, the unrealized loss on the interest rate swap agreements was $0.4 million. Interest expense~~issuance costs, for our total ~~$256.1~~$193.8 million in fixed rate debt totals approximately ~~$21.3~~$16.7 million per year, or a weighted average interest rate of ~~8.3%~~8.6% annually. Additionally, approximately ~~$8.5~~$8.2 million, or 2% of our total debt obligations, relate to capitalized leases with fixed payment and interest terms that expire between 2009 and 2014.

~~After the interest rate swap agreement expires in the second quarter, the~~The remaining ~~$139.5~~$135.1 million, or ~~39%~~40% of our total debt obligations, relates to debt that ~~will accrue~~accrues interest at variable rates. If we were to maintain these borrowings for one year, and maximize the potential borrowings available under the revolving credit facility for one year, including the $25.0 million in potential additional expanded borrowings, a 1% increase in the applicable interest rate would result in additional annual interest expense to the Company of approximately ~~$2.3~~$2.2 million. This computation excludes the ~~potential~~ $150.0 million in potential expanded term loan because of the limited circumstances under which the additional amounts would be available to us for borrowing.

Our excess cash is invested in instruments with original maturities of three months or less; therefore, as investments mature and are reinvested, the amount we earn will increase or decrease with changes in the underlying short term interest rates.

Foreign currency exchange rate risk

For the first ~~quarter~~half of 2009, ~~73%~~74% of our revenues were generated in non-U.S. dollar countries compared to 75% for the first ~~quarter~~half of 2008. We expect to continue generating a significant portion of our revenues in countries with currencies other than the U.S. dollar.

We are particularly vulnerable to fluctuations in exchange rates of the U.S. dollar to the currencies of countries in which we have significant operations, primarily to the euro, British pound, Australian dollar and Polish zloty. As of ~~March 31,~~June 30, 2009, we estimate that a 10% fluctuation in these foreign currency exchange rates would have the combined annualized effect on reported net income and working

$50 million to ~~$55~~$60 million as a result of the change in value of these items during translation to the U.S. dollar. For the fluctuations described above, a strengthening U.S. dollar produces a financial loss, while a weakening U.S. dollar produces a financial gain. We believe this quantitative measure has inherent limitations and does not take into account any governmental actions or changes in either customer purchasing patterns or our financing or operating strategies. Because a majority of our revenues and expenses are incurred in the functional currencies of our international operating entities, the profits we earn in foreign currencies are positively impacted by the weakening of the U.S. dollar and negatively impacted by the strengthening of the U.S. dollar. Additionally, our debt obligations are primarily in U.S. dollars, therefore, as foreign currency exchange rates fluctuate, the amount available for repayment of debt will also increase or decrease.

We are also exposed to foreign currency exchange rate risk in our Money Transfer Segment. A majority of the money transfer business involves receiving and disbursing different currencies, in which we earn a foreign currency spread based on the difference between buying currency at wholesale exchange rates and selling the currency to consumers at retail exchange rates. This spread provides some protection against currency fluctuations that occur while we are holding the foreign currency. Our exposure to changes in foreign currency exchange rates is limited by the fact that disbursement occurs for the majority of transactions shortly after they are initiated. Additionally, we enter into foreign currency forward contracts to help offset foreign currency exposure related to the notional value of money transfer transactions collected in currencies other than the U.S. dollar. As of ~~March 31,~~June 30, 2009, we had foreign currency forward contracts outstanding with a notional value of ~~$41.1~~$41.2 million, primarily in euros, that were not designated as hedges and mature in a weighted average of ~~2.8~~4.9 days. The fair value of these forward contracts as of ~~March 31,~~June 30, 2009 was an unrealized ~~gain~~loss of ~~approximately $0.2~~less than $0.1 million, which was partially offset by the unrealized gain on the related foreign currency receivables.

ITEM 4. CONTROLS AND PROCEDURES

Our executive management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of ~~March 31,~~June 30, 2009. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of these disclosure controls and procedures were effective as of such date to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

CHANGE IN INTERNAL CONTROLS

There has been no change in our internal control over financial reporting during the ~~first~~second quarter of 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is from time to time a party to litigation arising in the ordinary course of its business.

Currently, there are no legal proceedings that management believes, either individually or in the aggregate, would have a material adverse effect upon the consolidated results of operations or financial condition of the Company.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described in Part I, Item 1A. Risk Factors in our Annual Report onForm 10-K for the fiscal year ended December 31, 2008, as updated in our subsequent filings with the SEC before making an investment decision. The risks and uncertainties described in our Annual Report onForm 10-K,, as updated by any subsequent Quarterly Reports onForm 10-Q,, are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.If any of the risks identified in our Annual Report onForm 10-K,, as updated by any subsequent Quarterly Reports onForm 10-Q,, actually occurs, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our Common Stock could decline substantially.This Quarterly Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below and elsewhere in this Quarterly Report.

~~Other than as set forth below, there~~There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report onForm 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the three months ended March 31, 2009, as filed with the SEC.

~~Risks Related to Our Business~~

~~Our prepaid mobile airtime top-up and money transfer businesses may be susceptible to fraud and/or credit risks occurring at the retailer and/or consumer level.~~

In our Prepaid Processing Segment, we contract with retailers who accept payment on our behalf, which we then transfer to a trust or other operating account for payment to mobile phone operators. In the event a retailer does not transfer to us payments that it receives for mobile airtime, whether as a result of fraud, insolvency or otherwise, we are responsible to the mobile phone operator for the cost of the airtime credited to the customer’s mobile phone. We can provide no assurance that retailer fraud or insolvency will not increase in the future or that any proceeds we receive under our credit enhancement insurance policies will be adequate to cover losses resulting from retailer fraud, which could have a material adverse effect on our business, financial condition and results of operations.

With respect to our money transfer business, our business is primarily conducted through our agent network, which provides money transfer services directly to consumers at retail locations. Our agents collect funds directly from consumers and in turn we collect from the agents the proceeds due to us resulting from the money transfer transactions. Therefore, we have credit exposure to our agents. Additionally, our Company-owned stores transact a significant amount of business in cash. Although we have safeguards in place, cash transactions have a higher exposure to fraud and theft than other types of transactions. The failure of agents owing us significant amounts to remit funds to us or to repay such amounts, or the loss of cash in our stores could have a material adverse effect on our business, financial condition and results of operations.

~~Increases in taxes could negatively impact our operating results.~~

As a result of the current economic downturn, tax receipts have decreased and/or government spending has increased in many of the countries in which we operate. Consequently, governments may increase tax rates or implement new taxes in order to compensate for gaps between tax revenues and expenditures. Additionally, governments may prohibit or restrict the use of certain legal structures designed to minimize taxes. Any such tax increases, whether borne by us or our customers, could negatively impact our operating results or the demand for our products.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Stock repurchases

For the three months ended ~~March 31,~~June 30, 2009, the Company purchased, in accordance with the 2006 Stock Incentive Plan (Amended and Restated), ~~861~~1,752 shares of its Common Stock for participant income tax withholding in conjunction with the lapse of restrictions on stock awards, as requested by the participants. The following table sets forth information with respect to those ~~shares:~~shares (all purchases occurred during May 2009):

Total Number

of Shares

Purchased as

Maximum Number

Purchased as

Maximum Number

Total

Average

Part of Publicly

of Shares that May

Total

Average

Part of Publicly

of Shares that May

Number of

Price

Announced

Yet Be Purchased

Number of

Price

Announced

Yet Be Purchased

Paid Per

Plans or

Under the Plans or

Paid Per

Plans or

Under the Plans or

Period

Purchased

Share (1)

Programs

Purchased

Share (1)

Programs

January 1 — January 31

861

11.61

—

May 1 — May 31

1,752

14.53

—

Total

1,752

14.53

—

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Stockholders on May 20, 2009. A total of 48,096,391, or 95% of the Company’s shares of Common Stock were present or represented by proxy at the meeting. Of the five proposals presented below, four were approved as follows:

Proposal 1. Election of Directors

The two director nominees, information with respect to whom was set forth in the Proxy Statement, were elected. The vote with respect to the election of these directors was as follows:


Director	Voted in Favor		Withheld
Paul S. Althasen		47,592,263		504,128
Thomas A. McDonnell		29,297,698		18,798,693

Proposal 2. Amendment of the Certificate of Incorporation of the Company to eliminate the mandatory indemnification of non-executive employees and agents of the Company

The proposal was approved in accordance with the following vote:


For	Against	Abstain
47,874,652	110,104	111,635

Proposal 3. Amendment of the Certificate of Incorporation of the Company to permit Stockholder action to be taken only at a duly called annual or special meeting of Stockholders and to eliminate Stockholder action by written consent

The proposal was not approved in accordance with the following vote:


For	Against	Abstain	Non-Vote
10,149,333	32,337,478	154,443	5,455,137

Proposal 4. Amendment of the Company’s 2006 Stock Incentive Plan.

The proposal was approved in accordance with the following vote:


For	Against	Abstain	Non-Vote
32,424,947	10,093,957	122,350	5,455,137

Proposal 5. Ratification of the appointment of KPMG LLP as Euronet’s auditors for the year ending December 31, 2009

The appointment of KPMG LLP as Euronet’s auditors for the year ending December 31, 2009 was ratified in accordance with the following vote:


For	Against	Abstain
47,831,769	188,318	76,304

ITEM 5. OTHER INFORMATION

In the second quarter 2009, the Antitrust Division of the United States Department of Justice (the “DOJ”) served Continental Exchange Solutions, Inc. d/b/a RIA Financial Services (“CES”), an indirect, wholly-owned subsidiary of the Company, with a grand jury subpoena requesting documents from CES and its affiliates in connection with an investigation into money transmission services to the Dominican Republic during the period from January 1, 2004 to the date of the subpoena. The Company and CES are fully cooperating with the DOJ in its investigation.

At this time, we are unable to predict whether this investigation will result in the DOJ bringing charges against CES. Accordingly, we are unable to predict the outcome of this investigation, the possible loss or possible range of loss, if any, associated with the resolution of any charges that may be brought against CES, or any potential effect on the Company’s business, results of operations or financial condition.

We acquired all of the stock of RIA Envia, Inc., the parent of CES, in April 2007.

ITEM 6. EXHIBITS

a) Exhibits

The exhibits that are required to be filed or incorporated herein by reference are listed on the Exhibit Index below.

EXHIBITS

Exhibit Index


Exhibit		Description
3.1		Certificate of Amendment to Certificate of Incorporation of Euronet Worldwide, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 22, 2009 and incorporated by reference herein)

3.2		Certificate of Incorporation of Euronet Worldwide, Inc., as amended (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 22, 2009 and incorporated by reference herein)

10.1		Employment Agreement dated December 2, 1997 between Euronet Services GmbH and Roger Heinz, Senior Vice President — Managing Director, Europe EFT Processing Segment ~~(1) (2)~~(filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2009 and incorporated by reference herein)

10.2		Amendment No. 2 to the Credit Agreement dated February 18, 2009 (execution copy) ~~(1)~~(filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2009 and incorporated by reference herein)

10.3		2006 Stock Incentive Plan, as amended ~~(1) (2)~~
		(filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2009 and incorporated by reference herein)

12.1		Computation of Ratio of Earnings to Fixed Charges (1)

31.1		Section 302 —– Certification of Chief Executive Officer (1)

31.2		Section 302 —– Certification of Chief Financial Officer (1)

32.1		Section 906 Certification of Chief Executive Officer (1)

32.2		Section 906 Certification of Chief Financial Officer (1)


(1)		Filed herewith.

~~(2)~~		~~Management contracts and compensatory plans and arrangements required to be filed as Exhibits pursuant to Item 15(a) of this report.~~

PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed or incorporated by reference the agreements referenced above as exhibits to this Quarterly Report on Form 10-Q. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.

3539


PART I—FINANCIAL INFORMATION			3
ITEM 1. FINANCIAL STATEMENTS			3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			1620
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3235
ITEM 4. CONTROLS AND PROCEDURES			3336
PART II—OTHER INFORMATION			3337
ITEM 1. LEGAL PROCEEDINGS			3337
ITEM 1A. RISK FACTORS			3337
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			3437
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			38
ITEM 5. OTHER INFORMATION			38
ITEM 6. EXHIBITS			3539
~~EX-10.1~~
~~EX-10.2~~
~~EX-10.3~~
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2


	Three Months Ended March						Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008			2009			2008
Net loss	$	(11,954	)	$	(8,086	)
Net income (loss)							$	16,021		$	6,605		$	4,067		$	(1,481	)

Other comprehensive income (loss), net of tax:

Translation adjustment		(21,613	)		32,487			39,736			3,419			18,123			35,906
Unrealized gain (loss) on interest rate swaps		477			(751	)		353			724			830			(27	)
Gain (loss) on investment securities		227			(572	)		803			—			1,030			(572	)

Comprehensive income								56,913			10,748			24,050			33,826
Comprehensive income attributable to noncontrolling interests								(825	)		(644	)		(925	)		(1,972	)

Comprehensive income (loss)		(32,863	)		23,078
Comprehensive (income) loss attributable to noncontrolling interests		244			(765	)
Comprehensive income attributable to Euronet Worldwide, Inc.							$	56,088		$	10,104		$	23,125		$	31,854

Comprehensive income (loss) attributable to Euronet Worldwide, Inc.	$	(32,619	)	$	22,313


	Acquired						Total			Acquired						Total
	Intangible						Intangible			Intangible						Intangible
(in thousands)	Assets			Goodwill			Assets			Assets			Goodwill			Assets
Balance as of December 31, 2008	$	125,313		$	488,305		$	613,618		$	125,313		$	488,305		$	613,618
Increases (decreases):
Impairment		(1,111	)		(8,773	)		(9,884	)		(1,111	)		(8,773	)		(9,884	)
Acquisitions											6,802			—			6,802
Amortization		(5,552	)		—			(5,552	)		(11,249	)		—			(11,249	)
Other (primarily changes in foreign currency exchange rates)		(2,422	)		(14,727	)		(17,149	)		1,116			12,916			14,032


Balance as of March 31, 2009	$	116,228		$	464,805		$	581,033
Balance as of June 30, 2009										$	120,871		$	492,448		$	613,319


			Fair Values of Derivative							Fair Values of Derivative
			Instruments							Instruments
		Consolidated Balance Sheet				December 31,			Consolidated Balance Sheet				December 31,
(in thousands)		Location	March 31, 2009			2008			Location	June 30, 2009			2008
			Liability Derivatives							Liability Derivatives

Derivatives designated as hedging instruments under SFAS No. 133	Derivatives designated as hedging instruments under SFAS No. 133
Interest rate swaps related to floating rate debt		Accrued expenses and other current liabilities	$	(353	)	$	(830	)	Accrued expenses and other current liabilities	$	—		$	(830	)


			Asset Derivatives							Asset Derivatives

Derivatives not designated as hedging instruments under SFAS No. 133	Derivatives not designated as hedging instruments under SFAS No. 133
Foreign currency derivative contracts — gross gains		Cash and cash equivalents	$	365		$	433		Cash and cash equivalents	$	79		$	433
Foreign currency derivative contracts — gross losses		Cash and cash equivalents		(124	)		(155	)	Cash and cash equivalents		(88	)		(155	)

Total			$	241		$	278			$	(9	)	$	278


			Liability Derivatives							Liability Derivatives

Embedded derivative in foreign lease		Other long-term liabilities	$	(569	)	$	—		Other long-term liabilities	$	(293	)	$	—


Total derivatives			$	(681	)	$	(552	)		$	(302	)	$	(552	)


	Amount of Gain (Loss)					Amount of Gain (Loss)				Amount of Gain (Loss)
	Recognized in OCI on Derivative					Recognized in OCI on Derivative				Recognized in OCI on Derivative
	(Effective Portion)					(Effective Portion)				(Effective Portion)
	Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2009		2008			2009		2008		2009		2008
Derivatives in SFAS No. 133 Cash Flow Hedging Relationships
Interest rate swaps related to floating rate debt	$	477	$	(751	)	$	353	$	724	$	830	$	(27	)


		Amount of Gain (Loss)
		Recognized in Income on
	Location of Gain (Loss)	Derivative
	Recognized in Income on	Three Months Ended March 31,
(in thousands)	Derivative	2009			2008
Derivatives not designated as hedging instruments under SFAS No. 133
Foreign currency derivative contracts	Foreign currency exchange gain (loss), net	$	(37	)	$	79
Embedded derivative in foreign lease	Foreign currency exchange gain (loss), net		(569	)		—
Total		$	(606	)	$	79


	For the Three Months Ended March 31, 2008											For the Three Months Ended June 30, 2008
							Corporate											Corporate
							Services,											Services,
	EFT		Prepaid		Money		Eliminations					EFT		Prepaid		Money		Eliminations
(in thousands)	Processing		Processing		Transfer		and Other			Consolidated		Processing		Processing		Transfer		and Other			Consolidated
Total revenues	$	48,236	$	144,225	$	52,332	$	—		$	244,793	$	52,361	$	152,633	$	59,456	$	—		$	264,450


Operating expenses:
Direct operating costs		21,737		117,856		26,345		—			165,938		24,625		124,604		30,196		—			179,425
Salaries and benefits		7,908		6,568		11,757		4,461			30,694		9,113		6,916		13,035		4,000			33,064
Selling, general and administrative		3,778		5,275		7,452		4,444			20,949		4,610		5,459		8,577		1,404			20,050
Depreciation and amortization		4,668		4,192		4,827		294			13,981		4,974		4,234		5,090		315			14,613

Total operating expenses		38,091		133,891		50,381		9,199			231,562		43,322		141,213		56,898		5,719			247,152

Operating income (loss)	$	10,145	$	10,334	$	1,951	$	(9,199	)	$	13,231	$	9,039	$	11,420	$	2,558	$	(5,719	)	$	17,298


	For the Six Months Ended June 30, 2009
								Corporate
								Services,
	EFT		Prepaid		Money			Eliminations
(in thousands)	Processing		Processing		Transfer			and Other			Consolidated
Total revenues	$	91,798	$	279,776	$	110,737		$	—		$	482,311


Operating expenses:
Direct operating costs		38,611		226,377		53,613			—			318,601
Salaries and benefits		14,455		13,217		24,923			7,086			59,681
Selling, general and administrative		8,304		9,951		17,662			4,062			39,979
Goodwill and acquired intangible assets impairment		—		—		9,884			—			9,884
Depreciation and amortization		8,719		7,244		9,845			636			26,444

Total operating expenses		70,089		256,789		115,927			11,784			454,589

Operating income (loss)	$	21,709	$	22,987	$	(5,190	)	$	(11,784	)	$	27,722


	For the Six Months Ended June 30, 2008
							Corporate
							Services,
	EFT		Prepaid		Money		Eliminations
(in thousands)	Processing		Processing		Transfer		and Other			Consolidated
Total revenues	$	100,597	$	296,858	$	111,788	$	—		$	509,243


Operating expenses:
Direct operating costs		46,362		242,460		56,541		—			345,363
Salaries and benefits		17,021		13,484		24,792		8,461			63,758
Selling, general and administrative		8,388		10,734		16,029		5,848			40,999
Depreciation and amortization		9,642		8,426		9,917		609			28,594

Total operating expenses		81,413		275,104		107,279		14,918			478,714

Operating income (loss)	$	19,184	$	21,754	$	4,509	$	(14,918	)	$	30,529


			Fair Value Measurements		Total Losses for
	Carrying		as of March 31, 2009		the Three
	Value as of		Using Significant		Months Ended
(in thousands)	March 31, 2009		Unobservable Inputs		March 31, 2009
Goodwill	$	258,831	$	258,831	$	(8,773	)
Acquired intangible assets		—		—		(1,111	)

					$	(9,884	)


	Average Translation Rate
	Three Months		Three Months
	Ended March 31,		Ended March 31,		Decrease
Currency	2009		2008		Percent
Australian dollar	$	0.665	$	0.905		(27	%)
British pound		1.438		1.977		(27	%)
euro		1.306		1.499		(13	%)
Indian rupee		0.020		0.025		(20	%)
Polish zloty		0.291		0.419		(31	%)

•		trends affecting our business plans, financing plans and requirements;

•		trends affecting our business;


(5)		GOODWILL AND ACQUIRED INTANGIBLE ASSETS, NET


n/m — Not meaningful.


(1)		The price paid per share is the closing price of the shares on the vesting date.


By:		/s/ MICHAEL J. BROWN

		Michael J. Brown
		Chief Executive Officer

By:		/s/ RICK L. WELLER

		Rick L. Weller
		Chief Financial Officer